On the heels of a five-year low for Independence Day gasoline prices, drivers can expect more relief at the pump this summer as oil continues to slump.
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U.S. oil futures on Tuesday slipped below $51 a barrel for the first time since April 10. West Texas Intermediate crude was recently trading $1.73 lower, or 3.3%, at $50.80 a barrel.
Oil has retreated about 14% over the last four days, the steepest selloff in more than four years.
The new downturn for oil prices coincides with market volatility tied to debt negotiations in Greece, concerns over an economic slowdown in China and a potential nuclear agreement with Iran that could release the country’s oil into the world market—thereby adding to the current glut in global supplies.
All told, this week’s developments are reinforcing expectations for gas savings during the busy summer travel season.
“We’ve likely seen our peak of 2015,” Patrick DeHaan, senior petroleum analyst at GasBuddy said.
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Consumers are unlikely to see a “huge decline,” he added, but gas prices should remain below last year’s levels.
Avery Ash, a spokesman for AAA, said retail gasoline is expected to fall about 25 cents a gallon when oil drops $10 a barrel, excluding other factors such as regional production issues.
Motorists paid the lowest price at the pump for the Fourth of July since 2010, according to AAA. Gas was 90 cents a gallon cheaper than 2014.
GasBuddy’s live ticking average fell to $2.765 on Tuesday, nearly an 89-cent discount versus the same day last year. Gas is most expensive in Alaska, California, Hawaii and Nevada. Drivers in South Carolina, Mississippi, Alabama and Arkansas are enjoying the cheapest fuel in America.
DeHaan noted that strong U.S. gasoline demand should provide enough support to keep summer prices above $2 a gallon. Hurricane season may bring some volatility to gas prices in August.
Looking ahead to the fall, demand will slacken and with the switch to cheaper winter-blend gasoline, “we should see plenty of sub-$2 prices,” DeHaan said.
According to the Energy Information Administration, domestic gasoline demand touched a four-week average of 9.54 million barrels a day on June 26, up from 8.97 million a year ago.