UK drivers got a glimmer of hope on Thursday as petrol costs could ease after the falling price of oil slightly pushed wholesale prices down.
Global benchmark, Brent crude (BZ=F) retreated below $120 a barrel for the first time since May, in a move that could finally bring down prices at the pumps. It is currently down 1.2% to $$117.12 a barrel.
Us light crude (CL=F) also fell, down 1.1% to $114.04 at the time of writing.
A sustained easing in prices depends on wholesale prices remaining lower for several days or even falling, however, it takes time for these lower costs to filter through to forecourts.
Despite this, the cost of both petrol and diesel both rose to new records again on Wednesday, with the average price of unleaded topping 187p a litre and diesel above 193p, according to the RAC.
It comes as the International Energy Agency warned supply will lag behind global demand as it forecast oil demand will surpass pre-pandemic levels in 2023 following three years of COVID lockdowns and the economic shock of the Ukraine crisis.
World oil demand is expected to reach 101.6 million barrels per day, with much of the growth in demand anticipated to be driven by China as it emerges from lengthy pandemic lockdowns.
RAC fuel spokesman Simon Williams, said: "Average prices at the big four supermarkets, where fuel is traditionally the cheapest, are now 182.64p for petrol and 190.10p for diesel. Albeit in response to dramatic increases on the wholesale market over the last few weeks, the fuel retailing giants have raised the price of unleaded by 12p since the start of the month and diesel by almost 10p which has naturally led to a similar trend being seen with average prices around the UK.
"Fortunately, there was a 2p a litre reduction in the cost of wholesale petrol on Wednesday which could signal prices finally stabilising at the pumps. But much depends on wholesale prices remaining at a similar level for several days, or even falling. The wholesale price of diesel, however, continues to rise which will no doubt speed up its journey towards an average of £2 a litre.
"While, positively, the oil price retreated below $120 for the first time since late May, sterling sank to its weakest point since the start of the pandemic which is not good news as fuel is traded in dollars."
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