The latest data from the U.S. Energy Information Administration (EIA) showed that the average cost for Regular gasoline in America fell by two cents during the past week to $2.82 per gallon. That is the lowest price since April and represents a 4.76 percent decline from the 2018-to-date high hit in May. Regionally, the cheapest gas in the country can be found in South Carolina, where a gallon of Regular costs just $2.50 on average. Residents of California as usual have to pay the most in the continental U.S. for Regular ($3.59/gallon), and San Francisco is once again the city with the nation’s highest average price ($3.74/gallon).
A major factor behind the latest decline at the pump has been a sharp pullback in the price of oil. Indeed, the cost for a barrel of West Texas Intermediate crude has plunged by more than 13 percent since the end of June due to an uptick in supply, a stronger U.S. dollar, and concerns that an economic slowdown in Europe will weigh on global demand. Further, hedge funds have recently slashed their bullish bets on oil to an 11-month low, but bearish bets have also decreased, implying little impetus for a short squeeze any time soon. If all of that means the price for crude will remain where it is or head lower in the near-term, then gasoline prices should also avoid being a headwind for consumer spending, which bodes well for U.S. gross domestic product (GDP) growth this quarter.
Sources: U.S. EIA, GasBuddy, U.S. CFTC, Reuters, Saxo Bank
Post author: Charles Couch