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Gas prices plummet amid 'bewildering' decline for oil as Thanksgiving travel approaches

Gas prices are plunging as the Thanksgiving holiday travel period approaches.

A dramatic drop in oil prices over the last several weeks is fueling the decline.

Gas prices neared a four-year high in October, when they briefly topped $2.90 per gallon, but have since retreated.

Ample global supplies of petroleum, which is refined into gasoline, have played a key role in delivering savings for consumers.

"Thanksgiving gas prices are getting carved up at a time of year when we’re all used to getting the turkey ready," said Patrick DeHaan, senior petroleum analyst at fuel-finding app GasBuddy. "This is a fairly dramatic turnaround."

The national average was $2.68 per gallon on Wednesday, down 7 cents from a week earlier and 22 cents from a month earlier, according to AAA. Prices are still up 12 cents from a year ago.

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Below $2

Several dozen stations across Louisiana, Missouri, Ohio, Oklahoma and Texas were charging less than $2 per gallon as of Wednesday, according to GasBuddy.

That number "could be several hundred by Thanksgiving Day," GasBuddy's DeHaan said.

More than 54 million Americans are expected to travel at least 50 miles for Thanksgiving, according to AAA. That's up 4.8 percent from 2017 and marks a 13-year high.

DeHaan predicted that national prices could average somewhere in the range of $2.50 to $2.60 by Thanksgiving.

Oil's recent collapse is a big reason why. U.S. crude prices on Wednesday afternoon were trading in the range of $56.40, down about $20 per barrel from their 2018 high set in early October. Tuesday marked the 12th straight session that oil prices fell, according to JBC Energy.

"The scale of the sell-off in oil has been bewildering," Mizuho Securities managing director Paul Sankey said in a research note.

Ample supplies

One key factor was the Trump administration's decision to extend waivers to Iran on certain oil exports despite the reimposition of other sanctions amid a dispute over a nuclear deal. That has led to higher-than-expected Iranian petroleum output.

Meanwhile, strong output by U.S. oil producers and other countries has kept supplies humming. Production from Russia, Saudi Arabia and the U.S. is at record levels, according to the International Energy Agency.

Other factors include declining global demand. Investors believe the Organization of the Petroleum Exporting Countries may cut production in a bid to prop up prices, but anticipating that relief hasn't helped boost prices.

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