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The national average price of regular unleaded hasn’t started with a 2 since the spring of 2021, but it’s getting close to that threshold now, at $3.07 per gallon. That’s almost a dime less than a month ago, and nearing the psychologically significant $3 level. Crude oil prices have retreated this year as most major economies have slowed and the new trade war weighs on international shipping volumes. The price at the pump is likely to perk up a bit in the near future because of a recent spike in oil. But over the longer term, it’s a good bet that the national average will slip below $3 sometime this autumn or early winter, when fuel demand tends to be weak. Diesel, now averaging $3.64 per gallon, may also dip a bit, until winter fires up demand for chemically similar heating oil.
Oil prices have been under downward pressure for most of this year, but they got a lift from the latest U.S. sanctions on Russia’s oil exports. Benchmark West Texas Intermediate shot up to $62 per barrel to end this week, from a seasonal low in the upper $50s. We expect WTI to trade from about $55 to $60 per barrel this fall, unless some geopolitical crisis cuts off additional oil exports somewhere in the world. For now, the global oil market is well supplied and should be able to compensate for lost Russian sales with additional output from the Middle East and the U.S.
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The approach of colder weather has given natural gas prices a minor lift, with benchmark gas futures contracts recently trading at $3.20 per million British thermal units, up from about $3 this summer. That’s still relatively cheap, though. Gas held in underground storage is a bit above average for this time of year, suggesting an ample supply cushion as the temperature drops in the coming weeks. It would likely take a sharp, prolonged cold snap hitting the big cities of the Northeast and Midwest to really drive gas prices up much farther.
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