Petrol soon to cost less than water

It has been claimed that petrol will soon cost less than bottled water as the relentless decline in oil prices sends fuel down to 86p a liter.

Motoring group RAC said that pump prices now could fall back to levels last seen in the aftermath of the financial crisis in 2009 if the commodity plunges to as low as $10.

Average prices across the UK remain at 102.5 ppl for petrol and 103.2 ppl for diesel.

At 86 p, petrol would be cheaper than most super market varieties of bottle water, said Simon Williams, spokesman for RAC. Mr Williams said that, Motorists can expect some really low fuel prices in 2016.

Unleaded petrol has fallen below £1 per liter for the first time since 2009, with diesel also falling below the same level last week.

Saudi Arabia has urged Moscow, which is not a member of OPEC, to pare back on production to help re-balance the world’s oversupplied market.

Its gasoline stockpiles grew by another 8.4 m barrels in the week to January 8, higher than analyst expectations of 1.6m, the US energy Information Administration said.

The collapse in oil prices has been driven by OPEC’s decision to maintain record production in the face of dwindling demand.

Facing stalemate, OPEC has also called on producers outside the cartel to step back and help stabilize prices.

Around $400bn of spending on new oil and gas projects has been delayed or cancelled in the wake of the oil price crash, said consultancy Wood Mackenzie.

“You would literally need to have Vladimir Putin in Riyadh or Prince Salman in Moscow and see the formal handshake for any indication that this anything more than rhetoric,” said Helima Croft at RBC.

The cartel, which controls a third of the world’s supply, has failed to agree on a formal production target after being rived by conflict between Saudi Arabia and Iran.

Analysts said prices would fall further as worries about the state of the global economy and oversupply overwhelmed the market.

US crude oil inventories remain near levels not seen for this time of year in at least the last 80 years, said the EIA, who expect inventory growth to continue for the next two years.

The prospect of a Saudi Arabia and Russian entente was overshadowed by the news that global supplies grew by another 200,000 barrels to 482.6m last week.

Deputy Russian Finance Minister Maxis Oreshkin, in a tentative sign that doggedly low prices were beginning hurt the country said that the current oil prices may lead to quite hard and fast closures of certain oil producers in coming months.

Current OPEC production stands at around 31.5 m barrels a day. With no official quota in sight, its 13 member nations are now intent on pumping as much as they can in a global free for all to capture market share and smash rival producers.

But it is not just OPEC that has turned up pumps. Russian production has reached a post Soviet high era this year as it battles with Saudi Arabia over European market share.