Oil stocks drive petrol price to seven-month low
PETROL prices are at their lowest since last autumn, with experts predicting that oil cartel Opec’s campaign to drive up the price of oil could fail.
Government figures show petrol is now on average 115.6p per litre, while diesel is 117.7p. The last time prices were this low was in October, just before an Opec meeting at which it agreed to cut the oil supply by 1.8 million barrels a day in an attempt to bump up prices. Its members produce about 32.4 million barrels a day.
Opec, a group of mainly Middle Eastern countries led by Saudi Arabia, was joined last week by Russia – one of the biggest producers – when it agreed to continue supply cuts into next year to try to end a three-year glut. This has seen crude oil prices more than halve in the past three years. However, the oil price fell nearly 4 per cent after last week’s meeting to $51.30 for a barrel of Brent crude, the international benchmark.
Opec’s aim is to counter the growth of US oil production, in particular shale oil, which is produced through ‘fracking’, when fluid is pumped into oilbearing shale rock. Opec originally increased production to lower the oil price, making fracking less cost-effective, so forcing shale oil producers out of business.
Now however, oil stockpiles of 3billion barrels – 300million above the five-year average – are keeping prices low, even as production is cut.
Investment bank Goldman Sachs said Opec and Russia needed to cut production until stockpiles returned to normal.
Opec said the cuts could be extended at the next meeting.