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Oil price fall prompts call for petrol pump cuts
Oil prices are falling back to levels not seen since the end of October, sharply reducing the risk of oil hitting $100 a barrel. Prices slipped below $87 a barrel today as increasing stocks of oil in the US supported the Organization of the Petroleum Exporting Countries' (Opec) decision not to change output levels this winter. US crude futures dipped 54 cents to $86.95 a barrel this morning, after falling for the third consecutive day. US oil prices have fallen more than 12 per cent below the all-time peak of $99.29 on 21 November. London Brent crude fell 49 cents to $88.00 a barrel. While the cost of oil is receding, the effect is yet to be reflected in petrol pump prices, which are still widely priced at more than 103p a litre. However, there is likely to be pressure for petrol retailers to reflect the pull back from the peak in their forecourt prices. Oil initially surged more than $2 on Wednesday after Opec, which controls more than a third of world supply, rejected calls from consumer countries to boost output and said that it would not revisit its decision until February. Opec decided against a proposal to lift production by 500,000 barrels per day from the cartel's current daily output of 27.25 million barrels. The producers argued that the global market for crude oil was "well supplied". US crude stockpiles fell to their lowest level in more than two years last week, as fog disrupted the pace of imports into the Gulf Coast. But stocks rose again in the Cushing, Oklahoma delivery point for U.S. crude futures, while inventories of refined fuels rose by much more than expected. Stocks of distillate fuels, which include diesel, also rose by 1.4 million barrels despite an anticipated decline and gasoline inventories rose 4 million barrels. Rising stocks has raised the question of whether the credit crunch is finally having an impact on economic growth in the US and leading to a slowdown in oil demand. “In my opinion we are already in a recession, and you can see this in the demand for gasoline,” Jim Ritterbusch, president at Ritterbusch and Associates, told Reuters. There are also fears that the high price of oil is finally taking its toll on consumers. Oil prices have been sliding since late November, taking the sting out of a more than 40 per cent increase since August that put crude within sightt of $100 a barrel. No one has commented on this article. |
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