How low can it go? For the first time in more than four years, some drivers are paying fewer than $2 per gallon to fill up their gas tanks.
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One station in Oklahoma City, Okla. is now selling regular gasoline for $1.99 a gallon, the lowest price since July 30, 2010, according to GasBuddy, a website that reports fuel prices to the public.
“We knew when we saw crude oil prices drop last week that we'd break the $2 threshold pretty soon, but we didn't know if it would happen in South Carolina, Texas, Missouri or Oklahoma,” Patrick DeHaan, senior petroleum analyst for GasBuddy, said in a press release. “Those are all low-tax states and all have statewide averages at $2.52 or less.
The national average for gasoline now stands at $2.73 compared to $3.25 a year ago, according to AAA. The group also said that 43 states now selling regular unleaded for under $3.
This all stems from crude oil’s steep decline since this summer, as traders and industry experts worry about an abundant supply and falling demand. West Texas Intermediate and Brent Crude oil are both down roughly 40% from their recent highs above $100 a barrel in June.
Last week, OPEC said it would not cut production levels to help restore market equilibrium and prevent further declines in price.
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“This outcome means that Saudi Arabia and OPEC will no longer be the mechanism to balance the market from the supply side. They have relinquished that role…We cannot overstate what a dramatic and fundamental change this is for the oil market," Mike Wittner, head of oil-market research at Societe Generale SA said in an e-mailed note.
Since the group’s meeting last week, WTI and Brent are down 9% and 5% respectively.
Natural gas has also been a big story in the commodities space as we head into the winter. After prices shot above $4/mmBtu last month leading up to a cold weather outbreak across much of the U.S. and a snow storm on the east coast, natural gas has fallen to its lowest level in approximately six weeks as a warmer December forecast seems to be in store.
“Natural gas is stuck in the middle of whoop-bang-wallop week as mild weather outlooks as we move toward yuletide times is sending it to five-week lows,” Matt Smith, Commodity Analyst at Schneider Electric said.
Natural gas is down more than eight percent over the past two months, currently trading around $3.69/mmBtu.
Early Thursday in its weekly storage report, the Department of Energy said there were 22 bcf in net withdrawals from U.S. natural gas storage for the week ended November 28. The five year average is 50 bcf withdrawals and those surveyed by Reuters expected 41 bcf.
“The 22 bcf net withdrawal for last week was at the bottom of the range of market expectations, implying both a larger than expected drop in demand as temperatures warmed back up and possibly some step up in supply,” Tim Evans, Energy Futures Specialist at Citi Futures and OTC Clearing said in a note. Citi expected 47 bcf in withdrawals.