Oil and gasoline futures prices plunged after Russia and Saudi Arabia expressed interest in raising oil supply.
“This news couldn’t come at a better time, as motorists roll into the summer driving season,” said Mark Jenkins, spokesman for AAA. “The drop in crude should amount to a discount of at least 10 cents at the pump in the short term. Yet, that will not happen overnight. Retailers are usually slow to lower prices, especially those who bought shipments of gasoline when prices were at a premium.”
Gas prices in Tennessee increased 6 cents last week. The state average on Memorial Day was $2.73 – the most expensive for the holiday since 2014, when the average price was $3.45 per gallon.
Tennessee motorists paid 62 cents per gallon more than a year ago. It currently costs $41 to fill an average-size tank of gasoline – an increase of nearly $10.
The most expensive gas price averages in Tennessee were in Jackson at $2.77, Nashville at $2.76 and Knoxville at $2.72. The least expensive gas price averages in Tennessee were in Johnson City at $2.66, Chattanooga at $2.66 and Clarksville-Hopkinsville at $2.69.
Crude oil prices declined late in the week after Saudi Arabia and Russia discussed raising oil output by as much as nearly 1 million barrels per day. A decision is not expected until June 22-23. Saudi Arabia and Russia were part of a voluntary production cut agreement among both OPEC and non-OPEC oil-producing countries. The agreement called for a reduction of 1.8 million barrels per day in the market.
The effort to reduce the global oil glut and raise oil prices worked faster than expected. In fact, there are currently fears of a supply shortage, as Venezuela’s oil market has collapsed and new sanctions against Iran will reduce its contributions to global supply.
Early last week, U.S. oil prices traded at 3.5-year highs of nearly $73 per barrel. On Friday, crude prices plunged below $68 – the lowest daily closing price in three weeks. Overnight, West Texas Intermediate crude oil fell to less than $67.