US gas prices could fall even further after hitting 6-month lows as China steps up its fuel exports, analysts say

• China exported almost twice as much gasoline in August as a year ago, customs data showed Monday.
• Analysts said that could drive down US gas prices at the pump, already at their lowest since March.

Analysts expect US gas prices to continue falling as China ramps up fuel exports in a bid to spark an economic revival.

Customs data published Monday showed Chinese refiners supplied almost twice as much gasoline to the market in August as they did a year ago, with exports up 97.4%.

US gas prices at the pump are already at their lowest level in six months, as Americans change their driving habits in the face of high inflation. The rise in exports from China sets the stage for an even deeper fall, analysts believe.

"Such is the reaction when the world's largest oil importer ends up with an excess supply of refined fuel products due lower domestic economic activity," Saxo Bank's head of commodity strategy, Ole Hansen, told Insider.

"US gasoline prices, already trading at their lowest since March at $3.68 per gallon, may weaken further."

The average price of regular US gas has dropped steadily for 97 days in a row after setting a record high of $5.01 in June, according to AAA data. Its price has fallen 27% since then.

China has been able to export more gasoline because internal demand for the fuel is faltering. It's facing an economic slowdown as businesses grapple with shutdowns from strict COVID-19 restrictions and the country's worst ever heatwave.

The country's refiners and traders have applied for an extra 15 million tons of fuel export quotas, Bloomberg reported, as Beijing weighs whether to bring in fresh targets to boost the stagnant economy.

The government lifted export targets in both June and July in a bid to spark an economic revival.

"If the fuel export quotas are approved, the flood of gasoline and diesel will hit a market already focusing on a slowdown in demand due to global growth concerns," Hansen said.

"Through the lower prices of fuel, it will provide a temporary relief to consumers already troubled by high inflation."

The White House looked to reassure Americans about inflation Saturday, by saying the fall in gas prices was giving drivers some relief.

"Americans are getting some breathing room at the pump as we continue on the fastest decline in gas prices in over a decade," it said in a tweet.

Analysts said the fall in gasoline prices also reflects seasonal declines. The US's summer driving season typically ends around Labor Day, and demand for fuel fades in the final colder months of the year.

"If the news is confirmed that China is going to approve the release of additional fuel exports, this would put further pressure on gasoline prices," Rystad Energy strategist Claudio Galimberti told Insider.

"Diesel prices — which currently float at around $5 a gallon — would also tend to get lower, although seasonal demand for diesel and gasoil usually grows in Q4," he said.

An easing in crude oil prices in recent months has also helped pull gas prices lower. The downward trend continued Monday on pessimism about Chinese demand, with global benchmark Brent crude sliding 0.38% to $91.00 a barrel at last check, and WTI crude down 0.43% to $84.74 a barrel.

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