Gasoline prices are expected to drop in the coming days as analysts believe the peak price point has been reached for the summer. While they're confident prices will see a decline, this doesn't mean that prices won't rise later in the year, but for now, the rising costs appear to have subsided.
Oil prices have seen a decrease in trading, with benchmark West Texas crude down 19 cents in trading, its eighth consecutive day of declines, and Brent crude is down $1.11. This should be good news for travelers this summer as the peak travel season gets under way. It may mean more families could hit the road than previously expected.
"These prices are a bit excessive, in my view,'' says Tom Kloza, senior energy analyst for gasbuddy.com. "I think we'll drift a bit lower -- with the occasional small bounce -- from now until Labor Day. After Labor Day, we should see a return of sub-$3 a gallon prices," in areas of the South, Rocky Mountains and Midwest.
Gas prices have dropped to $3.65 nationally, but that is still up nearly 20 cents from the same time a year ago. Most analysts expect this figure to decrease back to last year's rates, or close to, in the coming weeks and months.
But any further unrest in Iraq, where the militant group ISIS is taking control of major oil-producing regions, could destabilize the market and lead to increases in prices. Also, observers are cautious over possible storms in the Gulf of Mexico, where any problems or refinery outages could see spikes in pricing.
"You could have one more breakout to the upside this year -- $110 a barrel is key,'' says energy trader Paul Kokuzian of Chicago-based Lakefront Futures & Options. "But barring some really concrete news, crude oil could go back to the $95 level after Labor Day."
Alison Ciacco, oil futures editor for Platts, a benchmark price and energy information provider, said that oil is still flowing out of Iraq and Libyan production has increased, which has resulted in lowering oil prices, even though they do remain a bit higher than expected.
"In the U.S., we continue to produce oil at multidecade highs and have ample supplies in storage, so that gives the market less of a need to rally prices," Ciacco says. "Futures prices have fallen from highs seen in June, and that translates to lower prices at the pump."