Gasoline prices have declined in recent weeks and their descent could continue into December, reaching a low of $2.99 by Christmas at the earliest on the hopes of China changing their strict covid-19 lockdowns and that OPEC+ would maintain its current output.
Prices could fall to $2.99 beween Dec. 25 and New Year's Day, said Patrick De Haan, head of petroleum analysis, GasBuddy, a Boston-based provider of retail fuel pricing information and data.
"The pace of decline has slowed just a touch in the last few days, but still on par for average #gasprices to fall to $2.999/gal between Christmas and New Years Day," he tweeted.
Crude oil prices rebounded slightly on Tuesday, rising by 1.6% to reach $78.50 for West Texas Intermediate, the U.S. benchmark while Brent crude oil, the international benchmark, increased slightly by 0.15% to $84.38.
China instituted a strict protocol, resulting in frequent lockdowns for covid-19 since the start of the pandemic. Chinese health officials said the country will increase the number of elderly people who are receiving covid-19 vaccinations as their constant lockdowns have resulted in recent extremely rare protests from its citizens who took to the streets to express their desire to seek more freedom.
Gasoline prices have faced a volatile year, but as the U.S. dollar weakens, crude oil prices have rebounded. Crude oil is traded in the U.S. dollar and its strength has an inverse impact on oil prices.
The dollar index sunk to 106.65 from a 20-year high since investors strongly believe the Federal Reserve will stop raising interest rates in 2023 as inflationary pressures are expected to start waning.
The current national average for gasoline prices is $3.49 a galllon while the median price is $3.39 a gallon, according to data from GasBuddy.
The most common price is $2.99 a gallon while the bottom 10% average price is $2.73 a gallon. The top 10% average is $4.86 a gallon.
In the U.S., there are six states where gasoline prices average under $3 and only eight states that average over $4 a gallon.
Prices have declined recently and are expected to maintain their downward trajectory. Gasoline prices falling to $2.99 a gallon on Christmas would be the lowest price since the spring of 2021.
OPEC+ Meets on Dec. 4 on Production Output
The Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, are meeting on Dec. 4 and it is anticipated that the group will not change their production output, five OPEC+ sources told Reuters. Two other sources told the wire service that another cut in production was a possibility, but did not consider the probability to be high.
Crude oil prices could impacted by OPEC+'s decision. In November, OPEC+ began cutting its output target by 2 million barrels per day (bpd) in an attempt to boost prices.
A group of diplomats from the European Union and the Group of Seven (G7) nations are also discussing the outcome of putting a cap on the price that Russia can sell its oil.
The diplomats have settled on potentially limiting the price to between $65 and $70 a barrel, lowering the amount of money Russia receives to pay for its continued war against Ukraine.
Poland has been the one country to hold out on the agreement and protested by stating that the price should be even lower.
The impact of the price cap is expected to start on Dec. 5 if all the countries can agree on a price.
