A vehicle refuels at a Shell gas station in Hyattsville, MD, US, on Tuesday, Nov. 28, 2023.
Al Drago | Bloomberg | Getty Images

Gas prices in the U.S. have fallen to the cheapest level of the year just as consumers prepare for the busy holiday shopping and travel season, according to data from the motorist group AAA.

A gallon of gas cost about $3.14 on Tuesday, with prices down 19% since a September peak after 12 straight weeks of declines. Gasoline futures, meanwhile, were trading at $1.98 per gallon on Tuesday, down 3.04%, suggesting prices at the pump could continue to fall.

Gas prices are averaging less than $3 a gallon in more than 20 states right now in the Midwest, South and parts of the Mountain West, according to AAA.

Prices at the pump could fall to the lowest level in 30 months by the weekend and the national average could be well below $3 a gallon in January barring a major calamity in oil markets, according to AAA spokesman Andrew Gross.

Consumers are seeing gas prices that are lower than the past two holiday seasons and the first year-over-year declines since 2020, according to a Tuesday note from Citi.

Retail gas prices are falling as U.S. crude oil has booked seven straight weeks of losses. West Texas Intermediate futures were down 3.56% on Tuesday to trade at $68.78 a barrel.

Oil prices are falling as record U.S. production collides with a weakening economy in China.

Several OPEC members and their allies such as Russia have promised oil supply cuts of 2.2 million barrels per day in the first quarter of 2024 in an effort to boost crude prices. Oil traders, however, are skeptical that OPEC will deliver on those cuts and remain bearish on the overall supply and demand picture.

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