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The odds on cheaper petrol prices for the Christmas holidays just got better as OPEC talks in Vienna ended without a deal on oil production cuts.
Crude oil prices slumped as much as five percent in initial trading this morning.
The crude oil price surged so much this year it sparked fears about petrol heading towards $3 a litre. Then it crashed so hard we are now more likely to see it below $2 a litre by Christmas.
Oil prices peaked in early October, which coincided with a fall in the New Zealand dollar and new fuel taxes to hit drivers in the pocket.
But in a dramatic market shift - which caught many traders off guard - oil prices have slumped in the past two months.
They have fallen as much as one third since a peak on October 3.
The kiwi has also bounced back - up about 7 percent since the start of October.
Drivers have already enjoyed 12 petrol price cuts since a peak in October, but there were more to come, says market analyst David Lewis, of Milford Asset management.
"Part of the reason that the price got so high was concerns about sanctions on Iran and a reduction of supply out of Iran," he said. "Then more recently we've seen (US President) Trump encouraging Saudi Arabia to continue producing at a higher level to try and keep that oil price down."
Trump wants a lower price to support the US economy and had quite a bit of leverage right now in the wake of the revelations about Saudi involvement in the murder of journalist Jamal Khashoggi, Lewis said.
But a 30-40 per cent swing in the oil price as we'd seen in the past few months was unusual, he said.
After the OPEC meeting Saudi Energy Minister Khalid Al-Falih said he wasn't confident of an agreement after discussions of a 1 million million-barrel-per-day (bpd) output reduction concluded without an agreement.
That left the oil market dangling in uncertainty, although non-OPEC allies join the group for a second day of talks tonight.
OPEC delegates have said the group and its allies could cut by 1 million bpd if non-OPEC heavyweight Russia contributed 150,000 bpd of that reduction. If Russia contributed around 250,000 bpd, the overall cut could exceed 1.3 million bpd.
Russian Energy Minister Alexander Novak said on Thursday that Russia would find it harder to cut oil output in winter than other producers because of the cold weather.
Oil prices have crashed as Saudi Arabia, Russia and the United Arab Emirates raised output since June after Trump called for higher production to offset lower exports from Iran, OPEC's third-largest producer.
Iranian exports have plummeted after the US imposed fresh sanctions on Tehran in November. But Washington gave sanctions waivers to some buyers of Iranian crude, further raising fears of an oil glut next year.
"Hopefully OPEC will be keeping oil flows as is, not restricted. The world does not want to see, or need, higher oil prices!" Trump wrote in a tweet on Wednesday (local time).
- additional reporting Reuters