Gasoline prices have been trending lower as oil prices decline and gasoline futures (RB=F) approach three-year lows.
The national average at the pump on Wednesday stood near a six-month low at $3.32 a gallon, down $0.49 from exactly a year ago, according to AAA data.
“Combined with the end of the summer gasoline driving season in the U.S. coupled with a so-far quiet hurricane season, oil prices simply collapsed, and that decline was led by weakness in gasoline,” Andy Lipow, president of Lipow Oil Associates, told Yahoo Finance on Wednesday.
As of Wednesday, the average retail price in nine states was below $3 a gallon, and half the country is likely to reach those levels by the end of September as much of the country switches to less expensive winter gasoline later this month, Lipow predicted.
“There’s a good chance the national average retail price of gasoline will hit $3 a gallon by the end of the year,” he added.
Oil fell 4% on Tuesday, erasing year-to-date gains amid concerns about China’s economy and expected additional supply from OPEC+ this fall. Over the summer, the oil alliance indicated it would reverse some of its voluntary output cuts starting in October.
On Wednesday, West Texas Intermediate (CL=F) traded below $70 per barrel, while Brent (BZ=F), the international benchmark, traded around $73 per barrel.
“Low prices… may force OPEC+ to rethink its policy and I would not be surprised if they reverse course and stick with their current production levels,” Lipow wrote in a note to clients.