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After a relentless month’s-long climb, U.S. national average gas prices have stabilized, with the current price of $3.594 for a gallon of regular unleaded gasoline only 4 cents higher on a w/w and m/m basis but nearly 30% lower compared to year-ago levels.
Diesel prices have also declined, with the current national average of $3.907 good for a 33% Y/Y contraction.
However, state-by-state prices are more volatile.
"We've seen some hefty gas price increases in several states in the Great Lakes and in Florida," Patrick DeHaan, senior petroleum analyst at Chicago-based GasBuddy, has said.
According to DeHaan, these markets are typically erratic, though recent slight price increases are likely to reflect growing demand. Federal data show that over the four-week period ending June 2, the total amount of gasoline sent to the market, a proxy for implied demand, averaged 9.2 million barrels per day, good for a 1.8% increase over the same period last year.
DeHaan says that gas prices could become increasingly volatile because conditions are ripe for some major movements in the broader market. For instance, another interest rate hike by the Fed could create more headwinds and stymie growth.
"With the Fed meeting this week to potentially alter interest rates again, we could see some turbulence in oil markets, potentially impacting states where gas prices were quiet this week, while the states that saw a big jump last week could see some moderate relief in the week ahead," DeHaan said.
That said, traders are betting that a pause in interest rate hikes is the most likely outcome when the Fed meets on Wednesday, with the stock markets starting to sputter back to life.
“The bear market is officially over,” Bank of America equity strategist Savita Subramanian has told CNBC, noting that the S&P 500 has risen 20% above its October 2022 low.
Another reason why gas prices are unlikely to return to last year’s highs: Low crude prices. Wall Street is increasingly becoming bearish about oil prices, with negative catalysts outweighing positive drivers.
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.