The sharp rise in the price of gasoline appears to have halted as fears of a recession ripple through the global energy markets, easing pressure at neighborhood gas pumps.
Oil futures ended lower on Wednesday, on worries a recession could hurt energy demand helping, sending U.S. prices for crude oil into a bear market — defined by a 20% or more drop from their recent high, MarketWatch reported.
The price of futures — an indicator of prevailing price trends — for West Texas Intermediate crude for August delivery; September Brent crude and gasoline for August delivery on the NYMEX as dropped as did the price for August natural gas.
Market forces at work
Crude prices extended their losses after a brutal selloff that saw Brent fall more than 9% Tuesday and WTI slide more than 8% for their biggest one-day percentage falls since early March, MarketWatch reported.
“As fears of recession continue to trade blows with tight supply conditions, the former is clearly coming out victorious over the past 24 hours,” said Robbie Fraser, global research & analytics manager at Schneider Electric, in a market update.
Gasoline futures fell more than 10% Tuesday and are down more than 22% since June, raising hopes the high price of gas across the country might soon fall, the online publication the Hill noted. Crude oil prices had surged worldwide after the Russian invasion of Ukraine.
Pump prices easing
“We’re on the cusp of seeing more savings,” said Patrick De Haan, head of petroleum analysis at gas price tracking site GasBuddy. “I’m trying to be a little bit optimistic here that this relief could make its entire way to the pump in the weeks ahead.”
For the time being, Americans are spending nearly $100 million per day less on gasoline than when prices peaked a few weeks ago, and that’s well-needed relief at a time when gas prices remain near records, DeHaan noted in a blog post on GasBuddy.com.
AAA reported this week the national average for a gallon of gasoline fell to $4.80, down 8 cents during the past week. The primary reason for the decline is lower demand at the pump as fewer people fueled up during the past two weeks. The lull, however, could end with the arrival of the summer driving season.
“Domestic gasoline demand dipped recently, which took some of the pressure off of pump prices. About 80% of stations are now selling regular for under $5 a gallon,” said Andrew Gross, AAA spokesperson.
“But July is typically the heaviest month for demand as more Americans hit the road,” Gross said.
According to the latest Energy Information Administration data, gas demand currently sits at 8.93 million barrels per day, which is lower than last year’s rate of 9.11 million barrels per day at the end of June.
On the other hand, total domestic gasoline stocks increased by 2.6 million barrels to 221.6 million barrels. These supply/demand dynamics, along with decreasing oil prices, have pushed pump prices lower. If these trends continue, drivers will likely continue to see relief at the pump, the EIA said.
