US Gasoline Prices Continue to Drop

U.S. Gasoline prices have dropped for 18 consecutive days and 25 of the last 28 days.

Oil Price Information Service’s chief analyst Tom Kloza said that the average of retail gasoline prices in the United States may reach $3.75 for quite a while and fall by 10 to 25 cents per gallon in the coming months.

The current crude oil prices sharply declined following the Labor Department’s disappointing jobs report during the previous month. West Texas Intermediate crude prices declined by 4% to reach $98.49 per barrel which is its largest drop in one day for this year. Oil prices haven’t gone below $100 per barrel since February.

Weaker than anticipated economic data from Europe and the United States has led crude prices lower for the past weeks. Moreover, supply issues in the refineries in the United States and easing problems in the Middle East where a probable showdown versus Iran has led speculators to force current crude oil prices sharply higher since the beginning of the year causing several forecasters to project average gasoline prices to reach more than its $4.11 per gallon record that was set in July of 2008.

However, with lower consumption, rising production and sustained weakness of the global economy, the Energy Department expressed earlier that production in the Unites States was a level not seen since 1999. The gasoline price increases slowed down six weeks prior to the peak of the summer driving months.

The lowest gasoline in the Unites States which is at the Midwest region could drop lower than $3.50 per gallon. The highest gasoline price is in the West Coast as it remains close to $4 per gallon due to tight supplies. According to Gasbuddy.com’s senior oil analyst Patrick DeHaan, refineries in the WestCoast keep on struggling with increasing their production which led to a 33% supply drop from the levels last year.

By: Chris Termeer