West Texas Intermediate (WTI) oil futures fell to the lowest price in more than a week, sliding more than $1 to below $88 a barrel, and RBOB gasoline futures plunged more than two percent to a two-week low, trading below $2.75 a gallon, after the U.S. Energy Information Administration reported a huge increase in domestic oil and gasoline supplies over the past week.
Meanwhile, gasoline demand last week fell three percent below year ago levels with only about a month left in the summer driving season, traditionally the peak season for gasoline demand.
The EIA reported gasoline supplies rose by 4.1 million barrels; crude oil supplies jumped by 2.7 million barrels, and distillate fuel supplies rose by 1.7 million barrels.
Crude stocks are now about seven percent above year ago levels, while gasoline supplies are nearly two percent below where they were this time last year. The distillate market remains extremely undersupplied, at 17 percent below year ago levels.
Brent crudefell more than 1 percentto trade near $102 a barrel.
Prices at the pump are now down fractionally from Tuesday at $3.49 a gallon for the national average for regular gasoline, according to AAA. Retail gasoline prices had risen over 2 percent in the past month, but are still 5 percent below year-ago levels.
"In the summer time we see jogs to upside and jogs to downside," says OPIS energy analyst Tom Kloza. "This puts an end to the jog to the upside that we've seen since July 2," when the national average for retail gasoline fell to a 2012 low of $3.32 a gallon. Gas prices could continue to fluctuate a bit.
But, "I'm pretty confident we'll see a drop lower between Labor Day and Election Day," says Kloza, who forecasts pump prices will fall toward $3 a gallon by year end.
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