Are Fuel Prices Easing in the UK?

What a week for oil prices…

 

Fuel prices ease in a volatile week for oil prices

 

The early part of this week saw a steady fall in the barrel price of oil from the recent high of $139 to just under $100 per barrel, albeit briefly.

 

This pressure eased partly due to signs that Russia may be willing to have substantive peace talks with Ukraine to de-escalate the current conflict, which will hopefully lead to a ceasefire in the coming weeks.

 

The market was also closely monitoring the evolving uptick in Covid-19 infections across China. Cases have reached a two-year high, with the virus outbreak expanding rapidly in the country’s north east. This has caused concern that China’s manufacturing output may be affected, forcing a decline in oil demand.

 

During the second half of the week, oil prices began to rise sharply amid fears posited by the International Energy Agency (IEA). They suggested that the market could lose up to 3 million barrels per day due to supply cuts to Russian oil exports on the back of recent sanctions imposed by Europe and the US. This is far greater than the 1 million barrel of oil per day previously estimated.

 

In the retail sector, prices at forecourts continue to rise as they play catch up to the recent spike in wholesale fuel prices. However, for fuel card users, due to the wholesale price easing at the beginning of the week, prices are expected to drop between 8-10 pence per litre from last week.

Looking forward: 

 

On Wednesday 23rd March, Chancellor Rishi Sunak will be delivering his spring statement on the health of the economy to the House of Commons and will be addressing the spiralling cost of living. The announcements he will be making will have nationwide effects, so anyone in the fleet and fuel industries need to make sure they’re up to date.

What a Week for Oil Prices…

This week has been a real roller coaster for the oil market.

 

Oil began the week at $115 per barrel for brent crude, spurred on by the continuing conflict between Russia and Ukraine. This was compounded further by the United States and its allies banning all Russian oil imports as punishment for Moscow’s invasion of the Ukraine. In addition, the market reacted to the threat of Moscow cutting off Europe’s gas supply and oil reached highs of $139 per barrel, the highest since 2008. By midweek, the upward pressure on fuel eased in a volatile trading session, where brent crude fell by 1.2%.

 

The head of the International Energy Agency described the decision last week to release 60 million barrels of oil reserves, compensating for any supply disruption, as an ‘initial’ response and said more could be released in the future if needed. Pressure from the public on the news further subsisted and the UAE announced it would also increase its output by 400,000 barrels per day.

 

In terms of UK fuel prices, we are likely to see another week of double-digit increases, with the retail forecourt cost for diesel heading towards £1.80 per litre and, in some areas of the UK, now more than £2.00 per litre.

 

As you would expect, the outlook for oil prices remains, in the medium term, high against the backdrop of increased Russian aggression against the Ukraine and the West’s ongoing political and economic support of the Ukraine.
If you are a fuel card user with a fixed weekly rate, it would be prudent to top up your fleet before the end of the week as the new, currently rising, prices will come into effect on a Monday.

 

If you are using fuel cards that use pump price rates, it’s best to shop around fuel stations and check the available rates. There are many tools online with which may be useful, including PetrolPrices to view nearby rates or our own Garage Locator to see the stations in your area. With some selective shopping and considered fuel card use, you may be able to save your fleet some money in a fraught market.

Looking forward: 

 

The dramatic rise in fuel prices may lead to you reaching your fuel card credit limit sooner. Make sure to be prepared for this possibility and get in touch with your fuel card provider if it is a concern.

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