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Oil prices plunged to their lowest level since June 13 – down five percent at times during the trading session. As of Wednesday afternoon, West Texas Intermediate Crude was trading at $51.17 per barrel – down more than 4.5 percent, while Brent Crude was trading around $56.35 per barrel.
Brent crude is falling into bear market territory, nearly 20 percent off its April peak.
And while inventories might have a short-term impact, an ongoing trade war between the U.S. and China is likely to continue to weigh on prices.
Tensions ramped up over the past week as President Trump communicated his intent to impose 10 percent tariffs on the remaining $300 billion worth of goods coming into the U.S. from China. In response, China allowed the value of the yuan to drop to a more than 10-year low against the U.S. dollar – after which the U.S. labeled China a “currency manipulator.”
“Demand [for gasoline] is likely to suffer not only because [of] the trade rift, but as summer closes, demand will drop,” Patrick DeHaan, a senior petroleum analyst as GasBuddy.com, told FOX Business.
That means lower gas prices are likely on their way for drivers.
As of Wednesday, the national average was $2.69 per gallon, according to AAA. That is down about 3 cents from last week, 6 cents month over month and 17 cents from the same time last year.
While a handful of gas stations are already seeing prices sink below the $2 per gallon threshold – a continuation of the trade tensions could exacerbate that trend.
“By Thanksgiving, I think we'll see sub-$2/gal stations spread to thousands of stations, mainly in low price states in the South, perhaps a few stations in the heartland and Great Lakes,” DeHaan predicted.
If the trade war escalates, the national average could fall as much as 50 cents per gallon by Thanksgiving, according to DeHaan.