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Gas Prices Go Down During Memorial Day Weekend
May 24, 2024
As Memorial Day weekend approaches, gas prices are dipping slightly. According to AAA, around 43.8 million Americans will journey at least 50 miles from home during the holiday period, marking a 4% increase from last year.
On Friday, the national average for gasoline was $3.61 per gallon, a slight decrease of $0.05 from the previous month but still $0.05 higher than the same time last year, as reported by AAA. This reduction in prices can be attributed to declining wholesale gasoline costs, which have been falling due to an oversupply in the market relative to demand. Over the past 90 days, both crude oil and gasoline inventories have seen slight increases, contributing to the downward trend.
Earlier this week, the Biden administration announced the sale of 1 million barrels of gasoline from the Northeast Gasoline Supply Reserve, a stockpile established after Hurricane Sandy in 2014. This fuel is set to be delivered by June 30, ahead of the July 4 holiday, to ensure sufficient supply in the Tri-state and Northeast regions. However, the impact on overall prices may be limited, as the U.S. consumes approximately 9 million barrels of gasoline per day.
Despite this temporary dip, analysts caution that gas prices may rise again over the summer. The Energy Information Administration (EIA) projects that U.S. retail gasoline prices will average about $3.70 per gallon during the summer driving season, which spans from May to September. This anticipated increase is due in part to a 3% reduction in refinery capacity compared to the 2019 peak, equating to 620,000 fewer barrels per day.
In contrast, some experts offer a more tempered outlook. Patrick De Haan, head of petroleum analysis at GasBuddy, expects prices to remain in the mid-$3 range per gallon, barring any significant disruptions such as a major hurricane.
U.S. oil futures have also softened since their April peak, influenced by diplomatic efforts toward a Middle East ceasefire and fluctuating expectations regarding Federal Reserve interest rate cuts. On Friday, West Texas Intermediate crude traded just below $77 per barrel, while Brent crude, the global benchmark, hovered around $81.10 per barrel. Analysts anticipate that the oil alliance OPEC+ might extend production cuts beyond June to counteract the declining crude prices and rising inventories.
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