Less than $ 1 per gallon: Coronavirus collapses US gas prices

Due to the fact that consumers travel less because of the coronavirus pandemic, the average price of gasoline on Friday, April 17, was $ 1,82 per gallon, which is 6 cents less than a week ago. In April 2019, drivers paid $ 2,83 per gallon (3,78 L). Writes about this USA Today.

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According to gas savings app GasBuddy, the national average for gasoline is $1,78, and 13 states have prices below $1 per gallon: Arkansas, Colorado, Iowa, Kansas, Kentucky, Michigan, Mississippi, Missouri, New York, Ohio, Oklahoma, Virginia and Wisconsin.

Analysts say that crude oil prices have reached a minimum not seen since 2002, as demand fell to a level that has not been more than half a century, and that an imbalance means that fuel prices should continue to decline.

According to a April 15 GasBuddy report on consumer fuel purchase trends, in March 2020, gallon purchases fell by 20% compared to March 2019. And in April, demand for gasoline fell by 50–70% compared with the end of February and the beginning of March.

GasBuddy also found that six states—Wisconsin, Kentucky, Michigan, Oklahoma, Minnesota and Illinois—have the lowest gas prices in a decade.

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Patrick DeKhan, head of gas analysis at GasBuddy, said in a blog post that in five out of six states fuel prices have not been so low over the past 15 years. For Illinois, the average cost of $ 1,77 has not been so low since November 2008.

DeKhan said that national average prices could "ultimately fall to the 2008/2009 low." According to GasBuddy, at the end of December 2008, the average cost of gasoline in the country was $ 1,59.

“I fully expect that about half the states will eventually see prices fall to decade lows, and perhaps most prices will end up falling to lows not seen since the early 2000s,” DeHaan said.

Nevertheless, given that some parts of the country plan to resume work in the near future, will consumers be able to take advantage of low fuel prices?

De Haan believes that there is great potential for gas prices to be lower this summer than previously predicted.

In addition, the price of US WTI oil on Monday fell below $ 3 per barrel, the last time such prices were in 1983, writes with the BBC.

Futures for WTI American oil on Monday, April 20, decreased by more than 80%.

On Monday, the price of Brent oil also fell to almost $ 27 per barrel, but much more slowly. She lost about 5% of the cost.

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The Urals brand on Friday was $ 23 a barrel.

Analysts attribute the price drop to two factors. First, a reduction in production, which Moscow and Riyadh agreed upon after a few weeks of trade.

In early April, OPEC + countries agreed to reduce oil production by 9 million barrels per day. The agreement was first joined by the United States. Saudi Arabia and Russia agreed to reduce production by 700 barrels per day in May and June.

Due to reductions, these countries hoped to achieve a sharp increase in oil prices, but a number of analysts believe that production should be limited even more.

“The market quickly realized that the OPEC+ agreement in its current form would not be enough to balance oil markets,” says Stephen Innes, chief analyst at brokerage Axicorp.

But the main problem is the lack of space in American oil storage facilities. Since the beginning of March, oil inventories in the city of Cushing, Oklahoma, one of the main hubs for crude oil trading in the United States, have increased by almost 50%, analysts at ANZ bank note.

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“We're seeing dumped sales because no one, no one at all, wants the storage facilities in Cushing to continue to fill up every minute,” Innes says.

Bloomberg reported that Saudi Arabia plans to sell the United States approximately 600 barrels of oil per day in April, the highest sales volume for the year.

In the first seven days of April, seven tankers with a capacity of up to two million barrels each went to the United States from Saudi Arabia.

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