Boost for motorists and airlines as petrol costs tumble... yet the speed of black gold’s collapse spooks global markets.
The price of oil slid further yesterday, providing a boon to motorists and fuel-dependent industries, yet contributing to market turbulence throughout the world.
American crude crashed below $50 a barrel during trading, while benchmark Brent tumbled under $53. Late last night US WTI had recovered to around $50.04, having printed $49.77 earlier on. Brent crude recorded a price of $52.66 during the day – its lowest level since May 2009.
The drops were partly prompted by data which showed Russian oil output at post-Soviet era highs and Iraqi oil exports near 35-year peaks.
UK supermarkets have been thrown into a race to the bottom as the downward trajectory of worldwide oil prices continues. British motorists are feeling the benefits of the falling prices, with several supermarkets moving to cut petrol prices at their service stations.
From today, Sainsbury’s will be reducing the price of both unleaded petrol and diesel by 2p per litre across its 298 forecourts – the seventh time the company has dropped fuel prices in the last six weeks. Morrison’s has also announced a 2p per litre cut from today onwards.
Meanwhile, Asda has dropped its national price cap to 105.7 per litre on unleaded and 112.7 on diesel. This is the second cut the Walmart-owned supermarket has made already this year – it slashed 2p off its national price caps for fuel on New Years Day.
However, the RAC’s Simon Williams believes more could be done to save consumers’ money. “With a barrel of brent crude oil now at around $55 [or below] helping to reduce wholesale prices, we think there is still more room to cut further, perhaps by as much as 5p to 6p by the end of January,” he said. Williams added that the RAC expects other retailers to follow Asda’s example, bringing a £1 per litre average for petrol closer to reality.
Airlines are also benefiting from the slide in oil prices – Ryanair shares reached an all time high yesterday, and British Airways owner IAG was up by 1.34 per cent, as were numerous manufacturing companies using oil-based materials.
Yet the FTSE, Dow Jones and Nasdaq were among many global markets taking a hit yesterday. While renewed political fears over Greece contributed to the chaos, oil prices are taking their toll. A number of major oil firms were down yesterday, including BP, Royal Dutch Shell, ExxonMobil and Chevron.
And HydroCarbon Capital analyst Malcolm Graham-Wood warned: “There is no sign that the fall is going to be arrested any time soon.”