May brings warmer weather and cheaper fuel

May brings warmer weather and cheaper fuel
The price of a litre of diesel ended May 2.5p cheaper than it started it, as supermarkets led the way in passing on wholesale fuel savings to drivers.

Petrol too, enjoyed a 2p a litre reduction over the course of the month as warmer weather was coupled with discounts at the pump, RAC Fuel Watch data confirms.

As of the end of May, the cost of filling a typical 55-litre family car with unleaded was £1 cheaper than in April at £64.20. Diesel tanks cost £1.40 less to fill at £64.76.

Diesel finished the month on 117.75p a litre, down from 120.25p – while petrol ended it at 116.72p, from 118.55p.

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Welcoming the good news for hard-pressed drivers, RAC fuel spokesman Simon Williams pointed out that it’s now “very difficult to know which way they will head next.”

It could, however, be further good news on the horizon, with OPEC (the Organization of the Petroleum Exporting Countries) potentially changing tack on its strategy of limiting supply.

The reductions across UK forecourts in May were sparked by the major supermarket chains, which early in the month issued two price cuts in just three days – following pressure from the RAC to pass on the savings being enjoyed by retailers.

Supermarket petrol fell to an average 113.48p a litre figure for May – a 2.18p reduction – while diesel sunk to 114.19p, after shedding 3.26p.

The largest drops in price were experienced in Northern Ireland, where the cheapest petrol in the UK was retailing at 115.47p – compared to the South East’s most expensive 117.25p.

While the East of England saw the greatest price drops in diesel (2.68p a litre), it was again Northern Ireland (116.46p) and the South East (118.43p) which provided the biggest contrasts in price across the country.

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Simon Williams said points out that while short-term uncertainty lingers for the direction of fuel prices, current indications suggest they may continue to fall, particularly for what typically remains overpriced diesel.

As he explains: “OPEC (the Organization of the Petroleum Exporting Countries) is trying to counter the oversupplied oil market with a view to making the barrel price rise. It agreed in May, together with a number of non-OPEC producers including Russia, to continue to cut daily production by 1.8m barrels as has been happening since the beginning of the year.

“However, this level of output restriction does not appear to have had the desired effect to date, partly due to the slightly higher oil price enabling the United States to increase its fracking activity and fill the gap.

“The fact OPEC didn’t limit supply further could bode well for motorists. The other key factor that affects the price we pay for fuel at the pump is the strength of the pound as fuel, like oil, is traded in dollars. It remains to be seen what will happen to sterling after this week’s General Election and in the ensuing Brexit negotiations with the EU, but a further reduction could lead to higher prices on the forecourt.”

Copyright Press Association 2017. Motoring News articles do not reflect the RAC's views unless clearly stated.