Gasoline pump prices continued to fall on Monday, offering a bright spot for drivers watching their wallets in the uncertain economy.
The average retail price for a gallon of unleaded regular was $2.708 a gallon Monday, according to AAA, Wright Express and Oil Price Information Service. It has dropped about 4.2 cents in the past week but is around 8.1 cents more than a year ago.
With the summer driving season about to end, experts predict pump prices will drop anywhere from a dime to a quarter a gallon in the weeks ahead.
“I don’t think there’s going to be a lot of discretionary driving because basically money is still tight for a lot of people,” Tradition Energy analyst Gene McGillian said.
In robust economic times, pump prices don’t typically begin to fall until after Labor Day. This year, demand has remained weak, which is one reason the prices are dropping earlier than usual, he said.
PFGBest analyst Phil Flynn thinks pump prices will fall by 10 to 25 cents a gallon in the next couple of months, barring a hurricane in the Gulf of Mexico that shuts down production. Other analysts predict prices will be 10 to 15 cents lower.
Supplies of oil and natural gas remain plentiful, near the upper range of the five-year average. That oversupply is keeping prices down as well.
Benchmark crude for October delivery fell 72 cents to settle at $73.10 a barrel on the New York Mercantile Exchange. The price hit $74.88 earlier in the day as Tropical Storm Danielle strengthened in the Atlantic, but forecasters now say it shouldn’t affect Gulf of Mexico oil and gas production.
Oil prices have fallen about $9.26 since the beginning of August.
“I think the market is starting to wake up to the fact that we probably have more supply of oil than we’re going to use in the near future and that’s really going to weigh on price as we get deeper into the shoulder season,” Flynn said.
Natural gas prices, too, are staying low because of abundant supplies and soft economic growth.
Traders added about a $1 premium into natural gas prices when forecasters predicted an active hurricane season at the start of summer, but that parade of storms has yet to materialize.
The market will start to remove some of that premium now because a few months of the season have passed without a significant storm, Flynn said.
It appears natural gas storage levels could build to a record high ahead of the winter season, which will keep a lid on prices barring a hurricane, he said.
Natural gas for September delivery 4 cents to $4.077 per 1,000 cubic feet.
The price has fallen about 84.6 cents since July 30.
In other Nymex trading in September contracts, heating oil lost 1.56 cents to settle at $1.9554 a gallon, while gasoline gave up 4.41 cents to settle at $1.8810 a gallon.
In London, Brent crude dropped 64 cents to settle at $73.62 a barrel on the ICE Futures exchange.