Gasoline prices are trending lower as oil prices decline and gasoline futures (RB=F) approach three-year lows.
The national average at the pump on Wednesday was near a six-month low of $3.32 a gallon, down 49 cents from exactly a year ago, according to AAA data.
“With the end of the summer gasoline driving season in the U.S. and a so-far quiet hurricane season, oil prices have simply collapsed, and that decline has been driven by weakness in gasoline,” Andy Lipow, president of Lipow Oil Associates, told Yahoo Finance on Wednesday.
As of Wednesday, the average retail price in nine states was below $3 a gallon, with half the country likely reaching those levels by the end of September as much of the country switches to cheaper winter gasoline later this month, Lipow predicted.
“There is a strong likelihood that the national average retail price of gasoline will reach $3 per gallon by the end of the year,” he added.
Oil fell 4% on Tuesday, erasing gains the commodity has made since the start of the year, on concerns about China’s economy and expected additional supply from OPEC+ this fall. Over the summer, the oil alliance signaled it would roll back some of its voluntary production cuts starting in October.
On Wednesday, West Texas Intermediate (CL=F) was hovering below $70 a barrel, while Brent (BZ=F), the international benchmark, was trading around $73 a barrel.
“Low prices… could force OPEC+ to rethink its policy and I would not be surprised if it reverses course and sticks to its current production levels,” Lipow wrote in a note to clients.
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