Jun 03, 2025 (Baystreet.ca via COMTEX) --
The U.S. is off to a strong start to the driving season as the slump in oil prices in recent weeks has led to the lowest gasoline prices for Memorial Day weekend in four years. Gasoline demand was strong over the holiday weekend, which ushers in the start of the period of peak demand in the United States and the rest of the northern hemisphere. A large part of the strong demand was due to the fact that the typical seasonal spike in the spring didn't materialize, because oil prices - the single-biggest driver of gasoline prices--lingered in the low $60s per barrel in the weeks ahead of Memorial Day weekend. The chaotic U.S. tariff policy and the flip in OPEC+'s production policy to seek a recovery of its market share have been weighing on the price of oil this spring. The $10 per barrel slump in prices in April and May means the U.S. gasoline prices also dropped--to the lowest for the season in four years, bucking the trend of rising gas prices in the spring. As a result, on May 19, the Monday before Memorial Day weekend, the average U.S. retail gasoline price of $3.17 per gallon was 11% lower, or $0.41/gal lower, compared to a year ago, EIA estimates showed. After adjusting for inflation (real terms), average U.S. retail gasoline prices going into Memorial Day weekend were 14% lower than last year, largely because crude oil prices have fallen, the Energy Information Administration said ahead of the start of the driving season. Gasoline consumption over Memorial Day weekend rose by 2% from the same weekend last year as consumers took advantage of lower prices at the pump, according to GasBuddy data cited by Bloomberg. The higher demand at the start of the summer driving season suggests good profits for the U.S. oil refiners that make the fuel, at least for now. The cheaper gasoline prices are a key driver of increased demand this Memorial Day weekend, Patrick De Haan, head of petroleum analysis at GasBuddy, told Bloomberg last week. "Refineries have a lot of room to run hard," De Haan said. AAA had estimated before the holiday weekend that a record number of 45.1 million people would travel at least 50 miles from home over the Memorial Day holiday period, up by 1.4 million travelers compared to last year, setting a new Memorial Day weekend record. The previous record was set back in 2005 with 44 million people, AAA said. "This spring - thanks to lower crude oil prices - gasoline prices haven't seen typical seasonal spikes," the association said. Gas prices haven't been this low over Memorial Day since 2021 when the national average was $3.04 per gallon, AAA said. Supply and demand are playing a role in this year's lower pump prices as crude oil supply is currently surpassing demand. "While fuel prices are expected to remain on the lower side compared to last summer, weather is the wild card," AAA noted, referring to the approaching Atlantic hurricane season, in which storms along the Gulf Coast could affect oil refineries and disrupt fuel deliveries, leading to a temporary increase in gasoline prices. For now, U.S. gasoline demand is strong, as lower prices trump drivers' concern about the economy and inflation with the Administration's on-again off-again tariff policy. Last week's EIA inventory report showed declines across the board and a jump in gasoline demand. "The most notable development was the significant increase in US gasoline demand to almost 9.5 million barrels per day, a good 800,000 barrels more than in the previous week," Commerzbank's commodity analyst Barbara Lambrecht said in a note carried by FXStreet. "Petrol station operators were obviously very optimistic. After all, the US Automobile Association (AAA) had also predicted a new travel record for the Memorial Day weekend." By Tsvetana Paraskova for Oilprice.com
COMTEX_466050217/2559/2025-06-03T07:12:12
