U.S. Gas Prices Fall as Oil Struggles: Holiday Relief for Drivers

drop in oil prices, seasonal demand

American consumers are fortunate to be on the receiving end of this festive season, as gas prices in the United States take a positive turn in preparation for this festive season. The average cost per gallon has fallen significantly in this case, averaging $3.20. The decrease of four cents from the previous week has caught everyone’s attention. The decreasing value is due to the challenges faced by the oil market, which is finding it hard to maintain the value above $70 per barrel.

OPEC+ has recently taken a remarkable stance to reduce oil production by about 2 million barrels per day. Yet, even with this bold step, the price of oil remains steadfastly declining. As the representative of AAA, Andrew Gross, stated, it is consistent with previous history that crude oil is currently following this trend. Notably, crude oil prices will normally decline by up to 30% from late September to early winter. This explains why gasoline prices usually follow the same trend. According to Gross, most gas stations in the USA are selling gas below $3 per gallon. The national average may also drop to such levels by the close of the year.

The Energy Information Administration’s (EIA) latest report reveals an incremental increase in gasoline demand. The figures illustrate that gas demand increased from 8.21 million barrels per day to 8.47 million barrels per day in the last week. This is a remarkable improvement because this time the total domestic gasoline stocks rose by an incredible 5.4 million barrels to a massive 223.6 million barrels. In essence, the increase in stock prices has been the main contributor to the plummeting pump prices, bringing a breath of fresh air to the filling stations. Oil prices falling will also mean that gas prices will keep reducing in the upcoming holiday season.

The market dynamics also reflect the trend in the oil sector. West Texas Intermediate (WTI) declined by $2.94 on Wednesday, with a closing price of $69.38. Oil price falls persist as concerns about weak demand continue for an extended period. This may encourage an increase in supply, thus forcing prices further down in the coming months of 2023. Recently, the EIA has reported a significant drop in total domestic commercial crude inventories. The latest report has indicated a significant drop of 4.7 million barrels in these inventories, which has resulted in a total of 445 million barrels for the past week. 

However, at the close of the year, the oil and gas markets are showing interesting signs that indicate the trend of the prices’ decline continues. This is good news for consumers, who will have an opportunity to relax financially during the holiday.