WASHINGTON – U.S. retail gasoline prices won't reach the peak of $2.35 a gallon in May as previously forecast and should continue declining through this month, the government said Wednesday.
A strong build in crude oil inventories to the highest level in almost six years has pushed down the price for oil and thus lowered gasoline costs, according to the Energy Information Administration (search).
The Energy Department's analytical arm had previously forecast that gasoline would peak at $2.35 a gallon in May. Fuel prices normally rise through the Memorial Day holiday — the traditional start of the U.S. summer driving vacation season — at the end of the month.
Since hitting a record high of $2.28 a gallon three weeks ago, the national average pump price has fallen about four cents.
"Unless supplies are disrupted, either through reduced crude oil availability or from a major refinery or pipeline outage, retail gasoline prices are likely to fall during May as lower wholesale gasoline prices are reflected at the retail level," the EIA said in its weekly review of the oil market.
"The U.S. gasoline market is showing marked signs of improvement for consumers," the agency said.
The EIA said gasoline prices will still remain "well above" last summer's level and the higher pump costs have put gasoline demand growth on "a somewhat slower pace."
The agency will release its revised monthly energy forecast May 10.