Gas Prices Expected to Dip Slightly Over Memorial Day Weekend as Millions Hit the Road

As millions of Americans prepare to travel 50 miles or more from home over the Memorial Day holiday, gas prices are expected to fall slightly from their peak last month.

AAA Projects 43.8 Million Travelers, a 4% Increase from Last Year

Despite the recent decline in gas prices, AAA projects that 43.8 million travelers will hit the road over the Memorial Day holiday travel period, a 4% increase from last year. The national average for gasoline stood at $3.61 per gallon on Friday, down $0.05 from one month ago but still $0.05 higher than a year ago.

Wholesale Prices Slipping, Leading to Lower Retail Prices

Tom Kloza, global head of energy analysis at OPIS, believes that retail gasoline prices will continue to fall into the weekend, following the trend of declining wholesale prices. “Retail [gasoline] ultimately follows wholesale, and wholesale prices have been slipping well below the numbers seen in the last three to six weeks,” Kloza said.

Slight Accumulation of Inventory in Crude and Gasoline

The decline in wholesale gasoline prices is attributed to the perception that oil supply is slightly outpacing demand. Over the last 90 days, the market has seen a slight accumulation of inventory in both crude and gasoline.

Prices Expected to Rise This Summer Despite Current Decline

Although prices are currently on a downward trend, the Energy Information Administration expects prices to rise by about $0.10 per gallon this summer as refinery capacity falls. The agency predicts that US retail gasoline prices will average about $3.70 per gallon for the summer driving season, which runs from May to September.

Biden Administration Sells 1 Million Barrels of Gasoline from Northeast Reserve

In an effort to ensure sufficient supply flows to the Tri-state and Northeast regions, the Biden administration announced earlier this week that it would sell 1 million barrels of gasoline from the Northeast Gasoline Supply Reserve. The sold fuel will be transferred or delivered no later than June 30, ahead of the July 4 holiday.

Crude Oil Prices Impacted by Middle East Ceasefire Efforts and Fed Rate Cut Expectations

US oil futures have come off their April peak amid increasing diplomatic efforts towards a ceasefire in the Middle East and wavering sentiment over expectations for a rate cut from the Federal Reserve. Analysts also expect OPEC+ to extend its production cuts beyond June amid declining crude prices and rising inventories.