Prices at the pump declined for the third straight week, and for the first time since April 9, gas prices dropped below $3.75 a gallon this week, breaking a 59-day string.
The national average price of regular grade gasoline was $3.72 a gallon on Friday, down 7 cents from last week and down 24 cents in the last month, yet prices remain $1.01 higher than year ago prices and 39 cents below the all time high of $4.11 a gallon set in July 2008.
“Analysts note further declines in the coming weeks are likely, primarily due to a 50-60 cents drop per gallon in wholesale prices in the last week. We anticipate gas prices will drop to within the $3.50 to $3.60 per gallon range by month’s end – just in time for the long July 4th holiday weekend,” said Martha M. Meade, manager of public and government affairs for AAA Mid-Atlantic.
Crude oil spent the early part of the week trading just below the $100 a barrel mark in response to concerns of economic slowdown and slowing demand growth. By mid-week the commodity broke through the $100 a barrel mark following news that OPEC could not reach an agreement to increase crude oil production. Subsequent supply fears sent crude to its highest level in two weeks Thursday ($101.93/barrel). Prices retreated on Friday amid speculation world demand will falter as Asia’s central banks raise interest rates to curb inflation and the U.S. job markets weakens. Crude oil settled at $99.29 for the week.
In its weekly report, the U.S. Energy Information Administration data showed crude stocks fell 4.9 million barrels to 369.0 million barrels, the largest one-week drop since December 2010. Gasoline stocks rose 2.2 million barrels to 214.5 million barrels. In its latest Short Term Energy Outlook, the EIA suggests that the May average retail gas price of $3.91 a gallon for May will be the peak monthly average price this driving season. The EIA now forecasts that the gas prices will average $3.75 a gallon during the summer driving season.
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