News hit last week that fuel prices were at their lowest since October 2021. Over the last week, a US interest rate cut, Middle East tensions, declining global stockpiles and weak demand from China have all influenced the cost of crude oil and fuel pump prices.

Robin, Revenue and Retention Manager at The Fuel Store, shares his insights into the factors impacting fuel prices, including his predictions for fuel costs as we head into next week. 

What determines fuel prices? 

The price you pay for petrol and diesel at the pumps is governed by wholesale fuel prices. Wholesale prices are influenced by a range of factors, including supply, demand and pricing for crude oil, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government. 

Factors impacting fuel prices this week

The market has settled stable in comparison to last week.

On Monday, oil prices dipped slightly as traders reacted to Friday’s late losses. U.S. traders had sold off covering positions after news that refineries had sustained no serious damage from Storm Francine. However, a statement from the U.S. offshore energy regulator on Sunday reported that nearly a fifth of crude oil production output in U.S. Gulf of Mexico federal waters remained offline. While refineries were reported undamaged, these production outages are keeping supply tight, supporting prices.

On Tuesday morning, Oil prices remained relatively unchanged. However, by the afternoon, prices began to rise in anticipation of a possible 0.5% cut in US interest rates. As expected, Oil prices posted modest gains of more than 1% on Thursday, following a confirmed cut in U.S. interest rates.

Crude inventories in the U.S., the world’s top producer, fell to a one-year low last week, government data showed on Wednesday. Exports are expected to rebound in the coming week following disruptions from Storm Francine.

Declining global stockpiles have helped offset some of the demand concerns arising from weak consumption in China. However, China’s slowing economy continues to limit oil’s gains. The latest Chinese refinery output data was weaker than expected, falling to a 22-month low of 13.91m bpd. The most recent new car sales data from China shows that sales of “new energy vehicles” were higher than sales of ICE vehicles for a second month. As electric vehicle sales surge, driven largely by China, the impact on oil consumption will likely become even more pronounced.

Traders are also following developments in the Middle East, after thousands of pagers and radio devices exploded in two separate incidents in Lebanon – injuring thousands of people and killing at least 37.

Next week’s fuel prices

We predict the market will be more stable going into next week. Businesses and drivers can reduce costs further by opting for a fuel card. In 2023, customers of The Fuel Store saved an average of 12 ppl off forecourt costs. 

Ready to find out how a fuel card can save you money? Speak to our team or explore our range of fuel cards here. 

The information provided in this post is for information only. It does not constitute financial advice. Pricing predictions are speculative and should not be relied upon for forecasting purposes. 

News hit this week that fuel prices are at their lowest since October 2021. Reduced wholesale fuel costs have been attributed to a lower oil price, together with a favourable Sterling to US dollar exchange rate.

With speculation around the fuel duty cut still looming large on the horizon, Robin, Revenue and Retention Manager at The Fuel Store, shares his insights into the factors that are impacting fuel prices, including his predictions for fuel costs as we head into next week. 

What determines fuel prices? 

The price you pay for petrol and diesel at the pumps is governed by wholesale fuel prices. Wholesale prices are influenced by a range of factors, including supply, demand and pricing for crude oil, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government. 

Factors impacting fuel prices this week

A number of factors are causing the market to trade lower this week, in comparison to this time last week. 

• On Monday, prices rebounded in a corrective rise after last week’s losses, which intensified on Friday after the release of US payroll data. 
• However, on Tuesday afternoon prices fell sharply when OPEC (Organisation of the Petroleum Exporting Countries) downgraded global demand growth forecasts for 2024. In its monthly oil report, the group revised demand growth to 2.03 million barrels per day from the previous forecast of 2.11 million barrels per day.
• On Thursday, prices were also impacted by Tropical Storm Francine, which tore through off-shore oil-producing areas in the Gulf of Mexico. Around 40% of US crude oil production was hit, totaling 675,000 bpd, and reducing operations at six refineries. 
• Crude exports have been hit by unrest in Libya, with oil exports falling around 81%, according to Kpler data, as the National Oil Corporation cancelled cargoes amid a crisis over control of Libya’s central bank and oil revenue.
• Demand expectations remain dismal as both OPEC and the International Energy Agency this week lowered their demand growth forecasts, citing economic struggles in China, the world’s largest oil Importer.
• The recent run of weaker Chinese economic data suggests that oil demand in the world’s second-largest economy may remain subdued for longer, while demand has been soft in other countries outside of China as well.
• Oil prices are likely to keep falling, the head of the International Energy Agency has said, as producers continue to pump volumes that exceed global demand. 

Next week’s fuel prices

We predict the market will trade lower going into next week, resulting in lower prices at the pump. Businesses and drivers can reduce costs further by opting for a fuel card. In 2023, customers of The Fuel Store saved an average of 12 ppl off forecourt costs. 

Ready to find out how a fuel card can save you money? Speak to our team or explore our range of fuel cards here.