2015 gas prices could avg. $2.64, lowest since 2009

January 06 04:52 2015

Crude oil prices plunged again Monday, exacerbating Wall Street’s New Year’s hangover. But crude’s sell-off is expected to extend a record-breaking decline in daily gasoline prices and push 2015 pump prices to their lowest yearly average since 2009. In its annual outlook due out Tuesday , price tracker GasBuddy.com. forecasts 2015 gas prices to average $2.64 a gallon. That’s 70 cents below 2014′s $3.34 average and nearly $1 a gallon below 2012′s all-time record of $3.60. Plummeting prices will save U.S. motorists about $97 billion overall this year, or about $750 per household, says GasBuddy.com senior analyst Patrick DeHaan.AFP 536375601 I FIN FRA BO

GasBuddy.com’s forecast comes a day after benchmark West Texas Intermediate plunged 5.3% to $49.88 a barrel in intraday trading — the first drop below $50 since April 2009, before settling at $50.04. The declines pummeled already hard-hit energy stocks, propelling the Dow Jones industrial average down more than 331 points to 17,502. Crude oil has now sunk 53% from a $107.26 peak last June, while gas prices have tumbled 102 straight days to $2.20 a gallon.

“As much we were thrilled by $2.99 gas at Thanksgiving, we now enjoy $1.99 gas in many places,” DeHaan says. “I fully expect we’ll soon become complacent with those $2.99 prices once these sub-$2 prices stick around a bit longer.” Oil prices have been pummeled due to a global supply glut, exacerbated by surging North American output, a failure by the Organization of the Petroleum Exporting Countries (OPEC) to reduce output and slowing growth in demand. Behind Monday’s cratering — which also pushed Brent crude oil down 6% to $52.97 — Russian oil production rose to two-decade highs last month, while Iraq announced plans to boost January exports 12% to 3.3 million barrels.

GasBuddy.com expects retail prices to gradually rise through the peak driving season, topping at $3 a gallon by May. In 2014, gas prices peaked April 28 at about $3.70. GasBuddy.com’s forecast is based on West Texas crude trading in the mid-$50s. “Three or four dollars lower won’t affect the forecast,” he says. “The fundamentals still support crude oil in the $55 to $60 range.”

Investment bank forecasts vary widely. Morgan Stanley recently forecast prices could fall as low as $43 a barrel. Monday, Sanford Bernstein estimated Brent crude would average $80 a barrel — about 50% higher than current levels, but down from an early forecast of $104 a barrel.