10 February 2016

Price of fuel may have reached low point for now, warns RAC

Fleets should make the most of petrol being under £1 while it lasts as data from RAC Fuel Watch suggests the cheap fuel market may have bottomed out.

Since oil reached a 12-year low of $26 on Wednesday, 20th January the barrel price has rebounded, finishing the month at $33.12, only $3 below where it started at $36.54.

That has caused the wholesale cost of both petrol and diesel to rise again, although diesel still remains 3p a litre cheaper than unleaded petrol.

January was nonetheless a landmark month for diesel with 5p a litre coming off the average pump price as a result of the supermarkets first cutting to 99.9p a litre and later to below 98p.

That led to an average petrol-diesel price flip on Monday, 25th January with diesel becoming cheaper than unleaded (101.18p diesel v 101.86p petrol) for the second time in six months when it lasted for nearly two months.

At the start of the year an average litre of diesel cost UK motorists 105.99p, but by the close of January it had fallen to 101.05p; in contrast petrol only fell from 102.69p to 102.01p, albeit its seventh consecutive monthly drop.

While the monthly reduction in diesel was causing its average price to move ever closer to the £1 milestone, early signs of an oil price recovery may prevent that happening, according to RAC.

RAC fuel spokesman Simon Williams said: ‘Motorists have seen petrol and diesel prices reach their lowest points since 2009. January saw the oil price go into free fall with talk of a barrel dropping to $20 and possibly even to $10, but since the low of $26 a barrel the market has started to creep back up. If this continues for a sustained period, wholesale costs will rise further which will in turn lead to pump price increases.’