A fall in demand for oil as well as the current economic slowdown will reduce fuel prices by as much
A fall in demand for oil as well as the current economic slowdown will reduce fuel prices by as much as 10 cents a litre, according to CommSec.
Equities economist Savanth Sebastian says the twin effects of the world’s two biggest oil consumers, the US and China, cutting back on their purchases as well as a drop in confidence may push down prices in the next two weeks.
“The expectation is that local petrol prices will fall by 10 cents, locked in over the next fortnight even the next week,” Sebastian says.
OPEC recently announced it would cut production by 1.5 million barrels of oil a day to maintain high prices, but Sebastian says the price of fuel will fall because of a drop in wholesale prices.
He says there has already been a 2.6 cents per litre drop in the national average, which was 147.6 cents per litre last week.
Sebastian says the Australian dollar is also appealing to international investors due to Japan, Singapore, New Zealand, the UK and the US slipping into “recession territory”.
Despite a plunge in the value of the dollar in recent weeks, Sebastian says it has bottomed out and is now stable.
He says the recent stability will result in sustainable fuel prices.