Falling crude prices have yet to further lessen the average price of gas at the pump for U.S. consumers, but market analyst Lundberg Survey Inc. has predicted a more than 20 cent reduction in the coming weeks.
Global crude oil prices fell 4 percent on Monday thanks to the largest single-day decrease in the Chinese stock market since the worldwide economic downturn, according to reports from Reuters.
Brent crude, considered the global benchmark for oil prices, was down $1.95 to $43.51 a barrel during the day, its lowest level since March 2009 and 16 percent below its opening price at the beginning of August.
West Texas Intermediate (WTI), the primary benchmark for U.S. oil prices was trading down 4.5 percent at $38.62 per barrel, 17 percent below its price at the start of the month.
Analysts attributed the steady drop in prices to continued overproduction in the global market, but some analysts believe the latest slip is solely based on growing fears of a prolonged economic downturn in China.
“Today’s falls are not about oil market fundamentals. It’s all about China,” Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt, told the Reuters Global Oil Forum. “The fear is of a hard landing and that things get out of the control of the Chinese authorities.”
Meanwhile, the global drop in crude oil prices hasn’t helped U.S. consumers at the pump, at least not yet, according to the biweekly Lundberg Survey Inc report released Sunday.
The Lundberg survey found the average price of a gallon of regular grade gasoline in the United States dropped just one-third of a cent to $2.71 per gallon in the past two weeks. Compared to last year, however, the average price of gasoline is down 77 cents a gallon from the same two-week period, according to the survey.
“From here, big retail gasoline price cuts are very likely, unless crude oil prices reverse course and climb back up to the May and June levels,” survey publisher Trilby Lundberg said of the results.
Lundberg added that lower U.S. crude prices could trigger a steep reduction in prices at the pump. “Retail gasoline prices may well fall more than 20 cents per gallon in coming weeks if crude oil prices do not surge,” she said.
Oil falls to fresh lows due to Chinese stock drop
