Petrol prices set to fall as Saudi oil flows

A customer pulls the nozzle of a petrol pump

Rising supply, a sluggish global economy and supermarket price wars could result in cheaper petrol

LAST UPDATED AT 10:17 ON Wed 13 Aug 2014

Expectations are rising this morning that petrol prices will soon fall as Saudi Arabia floods the market with oil.  

The cost of a barrel of crude oil has reached its lowest level this year, the Daily Telegraph reports, as supply accelerates ahead of demand.

The International Energy Agency, an oil industry think-tank, says the world will consume less crude this year than experts had forecast, while Saudi Arabian supplies are running at their highest level since last September.

The IEA cut its forecast for the rise in worldwide consumption to an extra one million barrels a day by the end of this year, the Wall Street Journal reports, 180,000 barrels a day less than it had previously predicted. The slow pace of the economic recovery has pegged back demand.

Meanwhile supplies have risen by 300,000 barrels a day above the forecast output.

The resultant stockpile has pushed oil prices down and created a layer of protection against any possible supply shock from crisis-hit Ukraine and Iraq. The IEA says the oil market seemed "eerily calm in the face of mounting geopolitical risks spanning an unusually large swathe of the oil-producing world", the Telegraph reports.

Although recent data from petrol price analyst Experian Catalist showed the typical price of unleaded petrol is almost unchanged so far this year at 131.3p a litre, prices are now expected to drop as the falling cost of crude creates room for price cuts. Supermarkets trying to lure in customers with cheaper fuel are likely to lead the charge. · 

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