Price At The Pump: How Low Will They Go?

Oil prices continue their multi-week trend of moving lower.

“Oil prices now rubbing up against multi-year lows as OPEC continues to churn out supply," said Patrick DeHaan is with Gasbuddy.com.  "China has been absorbing a lot of that supply, but the bigger question is when China, whose economy is slowing, suddenly tires and filling its reserves, what will happen to oil supply?” 

DeHaan pointed out that the United States is not purchased oil to be placed into reserves.  As of Tuesday morning both West Texas Crude and Brent Crude were trading higher by about 1%, with WTI trading around $58 per barrel, while Brent was closer to $61.

So, the question many are asking is how much lower can oil prices go?

“I think right now, there's a lot more concern to the downside of when we could potentially see a sub-$50 price," said DeHaan.  "In my opinion, that is something that we may see in January or February, kind of at the height of the lowest demand for the year before we start seeing an increase in demand. So that's something the market is worried about. We'll just have to see, though, if OPEC continues to stay the course on oil production.”

DeHaan added that these oil prices are having an impact on fuel prices, with both gas and diesel prices dropping nationally.  In fact, DeHaan said there is a station in Colorado that’s charging less than $2 per gallon for gasoline.

What does this drop in oil prices mean when it comes to U.S. oil production?

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