Will the Fed increase interest rates this week and will that derive the price of oil down?
NEW YORK (TheStreet) -- Good news, consumers -- here's a price that is coming down.Analyst are expecting oil prices to decline because a strong dollar would decrease demand from importing countries.
Gas prices in the United States are at their lowest levels since the 2008 recession, with a nationwide average of $2.44 per gallon. According to Lundberg Survey, of 2,500 filling stations surveyed gas prices have dropped 27 cents in the past three weeks.
"Consumers are winners at this point," the survey noted. "It is a big historical discount to last year." Drivers are now paying over a dollar less a gallon for gas compared to a year ago. We're seeing prices fall because gasoline supply is growing, Lundberg said.
Charleston, S.C., had the cheapest gas prices at $1.94 per gallon. But on the opposite side of the country, drivers paid $3.31 per gallon for gas in Los Angeles. Overall, oil prices have dropped nearly 60% since June of last year.
Additionally, oil futures are also being weighed down by China's economic crisis. The world's second-largest economy reported factory production and fixed-asset investment fell short of economists' forecasts in August, according to Reuters. Anticipation the Federal Reserve will increase interest rates later this week added more pressure on oil futures. If the U.S. central bank decides to do so, analysts are expecting oil prices to decline because a stronger dollar would decrease demand from importing countries.
Meanwhile, the Organization of Petroleum Exporting Countries reduced its oil supplies forecast by 72,000 barrels a day to 880,000 barrels a day. Despite this positive news, oil prices are expected to continue falling in the next coming weeks. Lundberg added that gas prices could go down another 4 cents to 10 cents per gallon.
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