Fuel cut on the cards
Cooling oil prices are likely to filter through to cheaper fuel prices at the pumps next month, economists say.
The oil price has slid downwards from its high of $147 a barrel in July, and was trading at just over $101 a barrel yesterday.
"I think we'll probably get a (petrol) cut of between 20 cents and 30 cents, and diesel will fall by between 30 cents and 40 cents, possibly more," said T-Sec economist Mike Schussler.
Econometrix economist Tony Twine agreed: "At the moment it looks set (for a price cut) in the order of 20 cents to 21 cents a litre.
"If this lower price is sustained or drops further, that 21 cent cut could increase before the end of the month," he said.
Meanwhile, the Organisation of Petroleum Exporting Countries (Opec) wraps up its two-day meeting in Vienna, Austria today. In the run-up to the meeting analysts were divided as to whether the cartel would agree to reduce production to support an oil price at over $100 a barrel, but it was reported yesterday that the oil ministers had made no formal changes to production commitments.
Twine said that it was unlikely that Opec producers would reduce output because at $100 a barrel oil was too valuable.
"The trend is irrevocably downward," said Twine.
Schussler said Opec's decision supported the case for further price cuts: "The oil price is under $102 a barrel and Opec is going to leave policy unchanged so it won't decrease the amount of oil available.
"I would suspect a third month of decreases which would be good news for consumers," Schussler said.
Twine said lower fuel costs would help ease consumer inflation: "It's a difficult one to quantify but it would be good for inflationary expectations if crude oil prices came down," he said.
Chris Hart, economist at Investment Solutions, agreed that fuel prices were likely to fall in October: "There is certainly momentum for more fuel price cuts but the amount would be less than at the beginning of this month."