American consumers are receiving an early holiday gift as national gas prices continue to fall. The average price for a gallon of gas has dropped to $3.20, a decline of four cents since last week. This decrease is largely attributed to the falling cost of oil, which is currently struggling to remain above $70 per barrel. The drop in oil prices persists despite OPEC+ announcing a reduction in oil production by approximately 2 million barrels per day.
AAA spokesperson Andrew Gross notes that this trend aligns with historical patterns, where crude oil prices typically decrease nearly 30% from late September into early winter, with gasoline prices following suit. “More than half of all U.S. fuel locations have gasoline below $3 per gallon,” Gross stated. “By the end of the year, the national average may dip that low as well.” The Energy Information Administration (EIA) reports a slight increase in gas demand, from 8.21 to 8.47 million barrels per day last week. However, a significant increase in total domestic gasoline stocks, by 5.4 million barrels to 223.6 million barrels, has contributed to the lowering of pump prices. If oil prices continue to remain low, consumers can anticipate further reductions in gas prices during the holiday season.
Oil market dynamics also reflect this downward trend. The West Texas Intermediate (WTI) saw a decrease of $2.94 at the close of Wednesday’s trading session, settling at $69.38. The decrease in oil prices is driven by market concerns over continued low demand, which could further increase supply while pushing prices down through the remainder of 2023. Additionally, the EIA reported a decrease in total domestic commercial crude inventories by 4.7 million barrels to 445 million barrels last week. As the year comes to a close, both the oil and gas markets are showing trends that suggest continued lower prices, providing relief to consumers during the holiday season.
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