The U.S. fuel market is on the verge of a significant correction. My analysis indicates that gasoline prices in the U.S. could fall below the psychological threshold of $3 per gallon by the time of the midterm elections in November. The historical market pattern after reaching the $4 level suggests a pullback to $2, and current trends only reinforce this scenario.
Falling Demand: A Fundamental Signal
The first and most significant factor is the sustained decline in gasoline consumption. Notably, demand began to fall even before the recent price spike, despite the relatively stable U.S. economy. According to the Department of Energy, the 12-month moving average of oil and liquid fuel consumption for motor gasoline is heading toward 8.7 million barrels per day by 2027. This would be the lowest level since 2021. As of July 2, the gasoline price was around $3.8 per gallon, which, in my view, is clearly inflated against the backdrop of shrinking demand. The price spike in the first half of the year was only a temporary phenomenon, while the downward trend in consumption dominated even before the escalation of geopolitical risks.
Link to the Stock Market: The Common Chart Syndrome
The second argument lies in the correlation between gasoline prices and the stock market. My observations show that the average daily national gasoline price has moved in tandem with the S&P 500 index relative to its 100-week moving average for roughly two decades. I call this pattern the "common chart syndrome." Even a moderate decline in stocks could push fuel prices toward the $2 mark. Thus, if the stock market pulls back, gasoline is highly likely to become cheaper in its wake, amplifying the autocorrelation effect.
Historical Pullback Pattern
The third factor is the classic market pattern after reaching a peak. The typical picture after gasoline prices hit the $4 mark suggests a pullback to $2. Given that the current level of around $3.8 has already been passed, and demand continues to fall, the scenario of a decline to $2.5–$3 becomes not just likely, but almost inevitable. Political incentives from the administration also work toward this outcome: lower fuel prices are a powerful card ahead of the elections.
My professional opinion: The U.S. fuel market is a mirror of macroeconomic processes. Falling demand, correlation with the stock market, and historical cyclicality form a perfect storm for price declines. Investors and traders should closely monitor the dynamics of the S&P 500 and EIA data—these indicators will provide an early signal for a move below $3. For consumers, this is a positive forecast, but for the energy sector, it is a signal for caution.