Experts: Gasoline Prices Will Drop Further

Wednesday, 23 Oct 2013 08:48 AM

By Dan Weil

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Gasoline prices have descended to a nine-month low, as robust demand for diesel fuel in Europe and Latin America spurs continued gasoline production in the United States, The Wall Street Journal reports.

And the move isn't over, experts tell the paper.

U.S. refiners are exporting diesel to those regions, and diesel is created in the same process that converts oil into gasoline. So refiners have incentive to keep making gas. October U.S. gasoline supply has hit a three-year high for that month, The Journal reports.

Editor’s Note:
Retired Americans Slammed by Obama’s Redistribution Plans

At the same time, U.S. demand for gasoline is sliding, with the summer driving season over, the paper says.

It's no wonder, then, that the average price of regular gas was $3.34 a gallon Tuesday, down 14 cents from a month ago, according to AAA.

It forecasts a price decrease of another 15 to 20 cents by year-end, The Journal reports.

Refiners "try to maximize what's seasonally in vogue and with diesel demand from Latin America increasing . . . they will end up with more gasoline," Robert Yawger, director of energy futures at Mizuho Securities USA in New York, tells The Journal.

When it comes to gasoline futures, the November Nymex contract slid 15 percent in the three months through Monday, when it settled at $2.6538 a gallon.

James Cordier, president of Liberty Trading Group, tells The Journal that the price will drop another 30 to 40 cents. The November contract settled at $2.6167 Tuesday.

In the crude oil market, West Texas Intermediate (WTI) slumped below $98 a barrel Tuesday for the first time since July amid concern that U.S. supply is mushrooming.

"The market could be trading in the low $90s before long," Kyle Cooper, director of commodities research at IAF Advisors in Houston, tells Bloomberg.

The November WTI contract settled at $97.80 Tuesday.

Editor’s Note:
Retired Americans Slammed by Obama’s Redistribution Plans

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