Oil prices fell further Monday offering hope that rising costs of petrol and diesel will also start to ease for hard-hit drivers.
However, fuel prices hit a new record high on the weekend before a fall in wholesale costs has been able to make an impact at the pumps, according to the latest industry data.
Hope for peace in Ukraine
Oil prices fell again on Monday as hopes new talks between Ukraine and Russia might find a solution to the invasion crisis.
After briefly peaking at around $130 last week, the price of a barrel of Brent Crude gave back some of its gains and dropped 6% to 105.61.
Meanwhile, figures from data firm Experian Catalist show the average cost of a litre of petrol at UK forecourts on Sunday was 163.5p, while diesel was 173.4p.
Pump prices were 148.0p per litre for petrol and 151.6p per litre for diesel just last month.
Market watch
The price of commodities across the board also dropped
As a result, the shares in these companies that dig things out of the ground fell heavily. Glencore, Rio Tinto, Anglo American, BP and Shell were all among the biggest losers across the day.
Overall the FTSE 100 index closed up by 0.5%, a nearly 38-point rise to 7,193.47,
CMC Markets analyst Michael Hewson welcomed the effects of optimism over the progress in ceasefire talks currently taking place between Ukraine and Russia, and which are due to resume tomorrow
But he warned these may be fragile.
“While welcome, today’s optimism conveniently ignores the escalation of hostilities by Russia over the weekend in hitting new targets in Ukraine, near the border with Poland,” Mr Hewson said.
“There is certainly an element of hoping for the best in today’s firmer tone, which seems to fly in the face of the reality on the ground and that for a sustained end to hostilities to take place, one side or the other will have to back down quite significantly.
“For a start Ukraine is likely to insist that Russia would need to withdraw a lot of its troops, while Russia’s continued actions inside Ukraine don’t speak to a mood of compromise. Consequently, the current rebound is likely to remain quite fragile in nature.”
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Fuel prices might get worse before they get better
RAC fuel spokesman Simon Williams said prices at the pump might get worse before they get better, warning that the average price of petrol “appears to be on a collision course with £1.65 a litre”.
But he added that drivers should get “some respite” as the volatility of oil and wholesale prices starts to calm.
“While there will almost certainly be more rises this week, drivers should soon get some respite from pump prices jumping by several pence a litre every day as oil and wholesale prices appear to have settled,” he said.
“The price hikes seen over the weekend are still a result of the oil price rise which began at the start of the month and peaked early last week.
“As the oil price has now fallen back, we should hopefully reach the peak and start to see prices going the other way to reflect the big drop in wholesale costs seen at the end of last week, subject to no further spikes in the barrel price this week.”
‘Bizarre anomalies’
AA fuel price spokesman Luke Bosdet said the 10.6p per litre slump in wholesale costs last week produced “bizarre price anomalies”.
He explained: “In one town this weekend, filling a tank at one forecourt was more than a pound cheaper than directly across the road at another.
“They normally match each other but the petrol station resupplied earlier in the week at the much higher price was nearly deserted while its neighbour had a small queue.
“Unless the price of oil takes off again this week, the AA expects these wild pump prices to stabilise this week and even fall back at fuel stations that were supplied at peak prices but will eventually get cheaper deliveries.”
Last week an investigation by the Press and Journal found petrol prices across Aberdeen, Inverness and Elgin and other Aberdeenshire, Highland and Moray communities were around the national average – with many slightly below.
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