Crude oil prices plunged Friday in the aftermath of the unforeseen results of Brexit vote and will continue their decline in the short-term. That could spell good news at least for drivers stateside who will celebrate their own Independence Day with cheaper gas prices.
Crude oil futures prices plummeted to $48.70 per barrel for September delivery, a decline of more than $2 since Thursday and are expected to continue declining during the next couple of weeks, said Patrick DeHaan, a senior petroleum analyst for GasBuddy.com, a Boston-based provider of retail fuel pricing information and data.
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If the British had voted to remain in the European Union, oil prices "might have inched up in July" in the short-term, he said.
"They would not have been huge moves, but prices would have risen by a few pennies," DeHaan said.
Instead, prices for crude oil will continue their downward slide as purchasing the commodity becomes more expensive for buyers trading in other currencies.
"Gas prices are tanking, and prices will probably continue to inch down," he said. "Companies who are not buying in the U.S. dollar will be shelling out more money."
As the U.S. dollar rallied against the euro and pound sterling, which reached more than 30-year record lows, oil consumption globally will be thwarted.
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"This will curb oil consumption in countries that do not use the U.S. dollar," DeHaan said. "It is great for the U.S. when the dollar strengthens because it is cheaper for us."
Global inventory levels of oil still remain historically high and above averages. Demand for oil in the U.S is still "healthy" and the Brexit vote is not predicted to affect consumption levels.
Along with the stock market, commodity markets also fear uncertainty and crude oil prices could easily plummet back to $40 per barrel, said Bernard Weinstein, associate director of the Maguire Energy Institute at Southern Methodist University's Cox School of Business in Dallas.
"The good news is that drivers this summer can expect the lowest gasoline and diesel prices in years with the national average dropping as low as $1.95," he said.
Oil prices will continue their decline and could even fall below $40 per barrel, said Matthew Tuttle, the portfolio manager of Tuttle Tactical Management U.S. Core ETF.
"Crude oil and gas were leveraged exposure to Brexit, and the leave vote now puts the possibility of oil going to $40 or below," he said.
While many consumers mistakenly believed on Friday that gas prices at the pump would rise because of the Brexit vote, drivers can expect to experience another "mild" decline, DeHaan said.
The average household saved $660 in 2015 from lower fuel prices and is predicted to save at least $240 this year, said Timothy Hess, a lead analyst for the EIA, the independent statistical arm of the Department of Energy based in Washington, D.C. Gasoline consumption increased slightly in 2015 by 3% from the previous year after a trend of flat to declining in recent years.
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