Petrol prices drop but not likely to last

New Zealand petrol prices fell yesterday as world oil prices reached a four-month high, suggesting that relief for motorists will be short-lived.

Oil rose after United States builders broke ground on more houses than forecast and jobless claims dropped to a five-year low, bolstering optimism for the US economy.

New Zealand-owned Z Energy and BP were the first to drop their prices to $2.09 for regular petrol and $2.17 for premium. Z Energy said it was able to decrease its prices as the cost of refined petrol and diesel on the international market had eased and the New Zealand dollar remained strong.

BP communications manager Jonty Mills said that so far this year, there had been a steady decline in the cost of refined products, coupled with small but steady strengthening of the New Zealand dollar overall.

''This has brought us to the point of being able to pass on the benefits today, so hopefully those customers that are still in holiday mode can take advantage.''

Falling oil prices across most markets during the past week and accelerating inflation in China were also contributing factors.

Inflation in China would likely see tightening of monetary policy which, while curbing inflation, would also curb demand and that had flowed through to market numbers. US debt talks were also putting uncertainty in the markets, Mr Mills said.

Brent North Sea crude for delivery in March climbed US73c (NZ87c) to $US110.41 ($NZ131.82) a barrel in late trading.

The New York Mercantile Exchange's main contract, light sweet crude for February, gained $US1.05 to $US95.29 a barrel.

Oil analysts told Reuters the rise in crude prices was supported by unrest in north Africa following an attack by Islamist militants on an Algerian gas field and the fighting in neighbouring Mali.

Craigs Investment Partners broker Chris Timms said the primary reason for the oil market moves was improving economic conditions in the US.

''The news from Algeria may be adding to the rally because of increasing fears about threats to energy facilities.''

 

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