Gasoline prices are slowly pulling back from 2023 highs last month. But as crude continues to pull back, drivers can expect fuel costs to drop like “wet feathers,” says one oil analyst.
“Right now, if you are a gasoline shopper, you can find gasoline for less than $2.99/gallon in perhaps half of all states,” Tom Kloza, head of energy analysis at OPIS, told Yahoo Finance.
“We’re looking at a $0.25 to $0.50-per-gallon drop in retail that is virtually certain,” he noted. “It’s a glacial pace but it will be quite noticeable.”
Many areas will see falling prices as winter grade fuel, which is less expensive to produce, makes its way into the market.
A bulk of the downward pricing pressure is also due to demand, which is at the lowest seasonal levels in 25 years, according the latest Energy Information Administration data. Gasoline demand dropped from about 9.46 million barrels a year ago to 8.78 million barrels in the last four weeks ending Sept. 30.
Oil, the underlying commodity for transportation fuels, has declined rapidly this week after rallying an average of 28% last quarter.
Oil jumped to a 2023 high in September amid OPEC+ output cuts, voluntary reductions from Saudi Arabia, and export restrictions from Russia.
Earlier this week JPMorgan analysts predicted global oil demand would slow this quarter after crude prices recently touched $90 per barrel.
“Moreover, demand restraint from rising oil prices is once again becoming visible in the US, Europe, and some EM countries,” reads the note titled “Demand destruction has begun (again).”
On Thursday, West Texas Intermediate (CL=F) settled 2% lower $82.31 following a 5% slide in the prior session. Brent International (BZ=F) futures fell to close at $84.07 after also tanking on Wednesday.
Ines Ferre is a Senior Business Reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.