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After a relentless four-week climb, U.S. national average gas prices have declined, falling 5.4 cents from a week ago to $3.86 per gallon on Monday. Still, the national average is still 20.6 cents higher from a month ago and a good 56.6 cents per gallon higher than a year ago.
But while prices at the pump for gasoline have declined, diesel prices are on the opposite trajectory, rising 18.7 cents in the last week to $5.26 per gallon.
“After a sharp rise in the national average over the last few weeks, we’ve seen an abrupt, yet expected decline as refinery issues have eased in the West and Great Lakes, overpowering some increases elsewhere. Though at the same time, diesel prices have soared. We’ll see a continued sharp drop in gas prices on the West Coast, including areas like Las Vegas and Phoenix, which are supplied by refiners in California, as refinery outages have been addressed,” Patrick De Haan, head of petroleum analysis at GasBuddy, has said.
Another reason for falling gas prices: falling crude prices.
Oil prices have continued slipping further as the market reassessed the OPEC+ production quota cut, and the IMF warned about the increased risk of a global recession.
After rising sharply following the announcement by OPEC+ that it will cut crude production by 2 million barrels per day, oil prices have resumed their downward trajectory as the effects of the meeting began to wear off.
Recession fears have remained a steady undercurrent in the oil markets recently for much of the current year, as have the tight supply situation that exists in the energy markets overall.
The International Monetary Fund said on Tuesday that the world economy was headed for “stormy waters” as it downgraded its global growth projections for next year and also warned of a harsh worldwide recession if policymakers mishandled the fight against inflation.
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.