Gas prices at a Shell gas station in Washington, DC, US, on Tuesday, Nov. 28, 2023.

Al Drago | Bloomberg | Getty Images

U.S. crude declined 4% on Wednesday, closing at the lowest level since late June with retail gasoline prices hitting the lowest point since January just ahead of the holiday shopping and travel season.

The West Texas Intermediate contract for January fell $2.94, or 4.07%, to settle at $69.38 a barrel, while the Brent contract for February declined $2.90, or 3.76%, to settle at $74.30 a barrel.

U.S. crude and the global benchmark have fallen for five straight days, despite efforts by OPEC+ to boost prices by promising to slash supply in the first quarter of 2024.

Prices at the pump in the U.S., meanwhile, have followed oil prices lower to hit $3.22 a gallon on average as of Wednesday, the lowest price since Jan. 3, according to AAA.

Oil prices have been on a steep downward trajectory from September highs as nations outside OPEC+, particularly the U.S., pump crude at a breakneck clip and worries grow about the Chinese economy.

Moody’s on Tuesday downgraded its outlook for China’s government credit rating to negative from stable.

Crude did spike for a period in mid-October when the Israel-Hamas war broke out, but traders have largely dismissed the risk of a broader regional war that could disrupt supplies since then.

Meanwhile, U.S. data on Wednesday sent a mixed picture on demand with crude inventories falling while gasoline stocks rose.

U.S. crude inventories fell by 4.6 million barrels for the week ending Dec. 1 but gasoline inventories rose by 5.4 million barrels, according to the Energy Information Agency.

Oil traders have also been skeptical that OPEC+, which includes OPEC members and its allies like Russia, will deliver on supply cuts of 2.2 million bpd in the first quarter next year.

Several OPEC+ members announced the voluntary cuts last week after the group failed to reach a unanimous agreement on production targets.

Saudi Energy Minister Prince Abdulaziz bin Salman and Russian Deputy Prime Minister Alexander Novak sought to assure the market this week that they could extend or even deepen the promised cuts.

Tamas Varga, an analyst with PVM Oil Associates, said those reassurances have “fallen to deaf ears.”