By Shariq Khan
Gasoline Futures Plummet Nearly 6% as Driving Season Ends, Oil Market Sell-Off Continues
U.S. gasoline futures took a nosedive on Tuesday, dropping almost 6% to their lowest level since December 2021. The decline was fueled by the conclusion of the driving season and a broader sell-off in the oil market.
October delivery gasoline futures settled at $1.98 per gallon, marking their largest single-session losses since July 2022.
Rabobank strategist Joe DeLaura noted that gasoline was the biggest loser in a day of energy market declines, attributing the pressure on the motor fuel to the end of the summer driving season in the United States and high inventory levels.
Moreover, oil futures also experienced a significant drop, falling 4.4% to $70.34 a barrel, their lowest settlement since December 2023. The resolution of disputes affecting Libyan oil output and weak manufacturing data from China contributed to the decline in oil prices.
Gasbuddy analyst Patrick De Haan predicted that the sharp decrease in oil prices could lead to the lowest retail gasoline prices since 2021 by the end of October. This is because the cost of crude oil is a major component of gasoline prices at the pumps.
Furthermore, gasoline trading at under $2 a barrel at the U.S. Gulf Coast refining hub, along with technical indicators pointing to further downside, indicate a challenging period ahead for the fuel market, according to fuel distributor TACenergy.
In summary, the end of the driving season, combined with supply and demand factors, has resulted in a significant drop in gasoline and oil prices. Consumers can expect to see lower retail gasoline prices in the coming months as a result of these market dynamics.