"This time last year, oil was $104 and it fell all the way to $82 in June. Today we're at $94, so we're starting off cheaper," said John Kilduff of Again Capital.
The national average for unleaded gasoline was $3.57 per gallon Wednesday, well below $3.92 on the same day last year, according to AAA. The national average is already below the EIA forecast average for the driving season, and is down from $3.64 per gallon last week. The EIA said the average price in last year's driving season was $3.69 per gallon, and $3.71 in 2011.
"I think we'll see prices probably 10 or 20 cents lower than last year," said Tom Kloza, chief oil analyst at Gas Buddy. "Last year, we actually saw the bottom of the cycle occurred on July 2. I have a hunch, we'll see the next couple of weeks or so drifting to the $3.50s ... and maybe $3.50 will be an appropriate number for the summer time nationally." He added, however, that prices could be more like $4 in California, Detroit, or Connecticut.
"This will be another summer of vast diversity," said Tom Kloza, chief oil analyst at Gas Buddy. "If you live in places supplied by the U.S. Gulf Coast refining complex which is just at record levels in Texas and Louisiana , you might see prices flirt with $2.99 levels and you might see those numbers in the usual spots, like Oklahoma, Missouri and the Rocky Mountain region."
"I still see possible trouble for some places. One could be the U.S. northeast," which has refineries that process foreign oil, he said. Imported Brent Crude is more expensive than West Texas Intermediate and other U.S. crudes. It was at $105.65 in late trading Wednesday.
"I think California is always a sore spot," Kloza said. "And I think the other sore spot is the upper Midwest just because they have a lot of refinery maintenance that's going on. It's really a grand reconfiguration of refining in the Midwest. They're basically taking a lot of units and remaking them so they can run this very heavy Canadian crude."
But consumers are currently paying $158 million less per day than they were at this time last year, he added. The average for all of 2012 was a record $3.6029, and it's $3.5836 a gallon so far this year.
Gasoline futures fell Wednesday after EIA inventory data showed gasoline supplies grew by 1.7 million barrels, compared to an expected decline of 1.8 million barrels. Demand for gasoline fell 2.4 percent for the four weeks, ending April 5. Gasoline futures fell eight cents, or 2.6 percent, to end Wednesday at $2.87 per gallon.
Andrew Lipow, president of Lipow Oil Associates, believes the highs may have been put in at the pump for the year, and that about $3.80 per gallon in February was the top. But analysts caution that hurricane season could be a factor for fuel prices should a hurricane impact refining or production in coastal refining areas. Colorado State University Wednesday predicted there will be 18 named storms this year, with four becoming major hurricanes.
Lipow said some of the pressure should be taken off of gasoline prices because refining capacity is now at a record 17.819 million barrels a day by the EIA. Refiners are running 15.5 million barrels of crude and feedstock or 964,000 more barrels per day, according to EIA.
Lipow expects gas prices to fall to an average $3.30 per gallon nationally before summer.
"The latest EIA forecast just confirmed what many people in the industry had concluded...it showed a surprise inventory build, a significant amount of imports and higher utilization which leads people to the conclusion that we're going to have more gas as we go into the higher demand season and we'll have enough of it," he said.
Lipow said there is even more refining capacity coming, from expansions including at refineries in Texas, Arkansas and Kansas. Plus, there are three new small refineries being constructed in North Dakota.
"Generally this suggests we should have a kinder and gentler 2013 in terms of gasoline prices," said Kloza. Higher mileage standards have helped drive down gasoline usage as consumers replace older cars. "Demand is now showing attrition," even with prices falling, he said.