Gasoline prices continued their decline falling to $3.99 on Aug. 9 and meeting the lows in March -- but market analysts say drivers aren't yet out of the woods.
The latest figures mark the 55th consecutive day of declines. giving drivers a break as high inflation rates have pummeled their budgets.
The national average price dipped below $4 a gallon for the first time since early March, said Patrick De Haan, head of petroleum analysis at GasBuddy, the Boston provider of retail-fuel-pricing information.
"Americans are now spending nearly $400 million less on gasoline per day than they were just over a month ago," he said.
Gasoline Prices Falling From Peak. But...
Gasoline prices have been falling steadily since peaking at $5.03 on June 14. They have decreased by more than $1 per gallon, mirroring the decline in crude oil prices.
Six states are selling gasoline for $2.99 a gallon or less, but De Haan said the number of stations selling it at that price will "likely shrink in the days ahead with oil and gasoline wholesale prices perking up."
Six gas stations in Oklahoma are selling gasoline for $2.99 a gallon while five in both Kansas and Louisiana, two in both Texas and Iowa, and one in Ohio are at that price.
“While the recent drop in gas prices has been most welcomed, the issues that led to skyrocketing prices aren’t completely put to bed, and still could lead prices to eventually climb back up, should something unexpected develop,” he said.
Why Crude Oil Prices Fell
Geopolitical tension, fear of an impending recession and unclear consumer demand have lifted crude oil prices, which have been trading range bound in the past few days.
Prices for WTI, the U.S. oil benchmark, fell 0.36% to $90.37 on Aug. 9. On Aug. 4, oil prices reached their lowest level since before Ukraine was invaded by Russia in late February. WTI reached $88 a barrel while the international benchmark, Brent crude, fell to $95 a barrel.
The declines reflected rising concern about a possible recession and the prospect that demand will decline.
Oil Prices Are Volatile
OPEC's stance, the ongoing war against Ukraine and EU sanctions on Russia all play a role in the outlook for crude oil prices, De Haan told TheStreet.
The inventory levels of crude oil are currently limited and will support prices.
"In addition, we're perhaps in the early stages of an economic slowdown, which could curb some demand, helping to push prices down," he said.
"But also with supply tight, any marked improvement in the economy could still cause prices to jump back up. Expect Brent to remain at a premium to WTI for quite some time -- at least through the Russia invasion."
Demand for oil could drop as the economy starts to slow and the summer driving season wanes, Bernard Weinstein, a retired economics professor at Southern Methodist University in Dallas, told TheStreet.
"The outlook for crude oil prices is difficult to predict, although the spread between WTI and Brent may widen further until we some some resolution of the Russia-Ukraine conflict," he said.
"In the U.S., a slowdown in the economy coupled with reduced demand after the summer vacation driving season should keep crude oil prices in check. The current economic doldrums in China, previously the world's largest importer of crude oil, will also dampen demand for crude oil."
The global oil supply will be affected in the coming months by Russia's ongoing sanctions, Rob Thummel, senior portfolio manager at Tortoise in Overland Park, Kan., told TheStreet.
"If we are in a recession, then oil prices are likely to fall into the $80s by the end of the year," he said. "If not, oil prices likely rise to about $110 by the fourth quarter as Russian oil sanctions really begin to reduce the global oil supply."