Petrol prices may fall further

Tumbling global oil prices may see further price falls at the petrol pump, but that is likely to be dependent on the ferocity of the forthcoming US hurricane season and perception of simmering tensions in the Middle East.

At present, the recent falls of $US3 ($NZ3.95)-$US5 a barrel appear to be reflected within about five working days at New Zealand pump prices.

The key prompt to the past two 4c-a-litre drops during the past week in New Zealand fuels to about $2.10 per litre has been the tumbling global oil price and strength of the New Zealand dollar against the US greenback, Westpac senior economist Doug Steel said yesterday.

"The idea of an economic recession in the United States is dampening demand. But there was a slight $US2 rebound on fears of a hurricane in the Gulf," Mr Steel said.

The price of oil rose on Monday when tropical storm Dolly barrelled into the Gulf of Mexico, stoking concerns of disruptions to US offshore oil and gas production, and prompting the evacuation of some offshore platforms, Reuters reported yesterday.

With Dubai crude oil at $US129 just before noon yesterday and the New Zealand dollar at US77.11 cents, Mr Steel said the $2.10 per litre pump price was "fair".

He said prices as low as$1.85 a litre could be achieved, so long as the kiwi sat in the "mid-US 70s range and Dubai fell to around $US100 per barrel, however, because of the volatility in oil at present it could yet "fall or swing" down to $100 or up to a record $US160 - having hit $147.27 12 days ago.

Yesterday Brent oil from the North Sea was trading $US128.60, Dubai about $US125.05 and West Texas international around $US131.40.

Automobile Association spokesman Mark Stockdale said the recent fall reflected about a $US12 decline in crude oil prices, not a fall of $US17 from the record $US147.27, as the major companies did not increase the petrol price at $US147.

He said the AA monitored prices based on the oil companies' "import margin", of around 15c a litre, less domestic infrastructure expenses, and at $2.10 a litre was "about right".

As with other analysts and economists, Mr Stockdale did not want to predict whether crude oil would tumble further in price or begin firming up again because of the wide numbers of factors which produce volatility in the oil sector.

"All we can say is this is a positive trend which we hope continues," he said.

 

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