Diesel price lowest in five years

Diesel prices have hit a five-year low, according to information from Experian Catalyst.

The average price of the fuel has now fallen below 113p per litre – the first time since January 2010. Over the last week, supermarkets have reduced the price at the pump by between 2p and 4p per litre. This follows news in late July that the average cost of diesel had become cheaper than petrol for the first time since 2001.

The cost of petrol has also dropped in recent days. It hit an average of 115.24 per litre – the lowest it has been for three months.

A drop in fuel prices at the pump have come on the back of a reduction in oil prices. Earlier this month, the price of a barrel of Brent Crude oil fell to below $50 (£32). The last time it was below that price mark was in January.

Commenting on the fall in prices, energy industry analyst David Hunter explained to BBC Radio 5 live's Wake up to Money programme that one reason for the drop was the economic situation in China.

"Faltering economic growth in resource-hungry countries like China is keeping a lid on demand for oil, while on the other hand, there is a supply glut," he said.

However, the International Energy Agency pointed out that the global demand for oil is expanding at its fastest pace in five years. They say the global oversupply will last through to 2016.

Possible further price drops

Mr Hunter noted that further fuel price reductions were possible if crude oil prices continue to fall, and the pound sterling maintains its value against the dollar.

He also explained that the price of diesel is currently falling faster than petrol.

"Recently, Saudi Arabia has ramped up production of ultra-low sulphur diesel for export to Europe – resulting in steeper falls for diesel than petrol," he said.

Deputy chief executive of the Freight Transport Association, James Hookham, noted that it was a volatile market, however and warned that the drop in prices might not last.