Gasoline Prices to Cool This Fall

Expect gasoline prices to continue edging down. The national average price of regular unleaded slipped a penny from a week ago to reach $2.18 per gallon. We expect the price at the pump to near $2 on average as autumn continues. Fuel demand remains muted and oil prices have retreated a bit from their summer peak. Diesel, now averaging $2.40 per gallon, is also off a penny and may slip a few more cents this fall.

Crude oil prices dropped in recent weeks on signs of still-weak global oil demand. Benchmark West Texas Intermediate was recently trading slightly below $40 per barrel, down from the low $40s earlier this month. Prices figure to be volatile, especially with so many ups and downs in financial markets. But we look for WTI to mostly trade from $35 to $40 per barrel in coming weeks, unless a hurricane shuts down oil production and refineries along the Gulf Coast.

The late-summer rally in natural gas appears to be over. The benchmark gas futures contract recently traded at $1.88, down sharply from its recent high of more than $2.60. Gas stockpiles remain high for this time of year, and cool but not cold weather across much of the country means that demand should be fairly low. This summer’s heat waves spurred heavy demand for gas at power plants, which were needed to keep air conditioners running overtime. Now, much of the country is enjoying cool to temperate autumn weather. A sharp cold snap later in the season could give gas prices another boost, but until that happens, we look for futures to trade near $2 per million British thermal units.