The price of fuel fell by more than 2.5ppl in March bringing the average price of petrol down to 117.54ppl and diesel to 119.54ppl, data from RAC Fuel Watch reveals.
At the start of March a litre of unleaded cost 120.15p and diesel 122.19p, but the biggest fall in the price of a barrel of oil since last July ($3 – $55.31 on 1 March to $52.30 on 30 March) led the supermarkets to make two 2ppl cuts in the course of the month, winding back prices to a similar level they started 2017 at.
RAC fuel spokesman Simon Williams said: “March brought some much-needed spring cheer to motorists with a significant 2.5ppl reduction in the average price at the pumps. While prices were static in February, the two months before that saw 5ppl added, completing a year of rising average pump prices. March saw the biggest fall in the price of diesel since January 2016 and since November last year for petrol.
“With longer days and the prospect of warmer weather many motorists will be making some longer journeys so lower fuel prices are very welcome but the big question is what will happen as we move towards the summer.
“Everything really hinges on the oil market and whether more is done to curb supply with a view to getting the price to rise. The Organization of the Petroleum Exporting Countries (OPEC), together with some non-members, have cut production, but their efforts have been undermined by the US ramping up its fracking production.
“The low oil price that gave rise to fuel being sold for under £1ppl in January 2016 was all driven by OPEC over-producing to lower the oil price and stop US fracking activity but every week now more fracking rigs are coming online. This is no doubt causing a major headache for OPEC. It must decide whether to cut production further and allow the US to gain more market share as the oil price rises or reconsider returning to over producing and lowering the oil price to make fracking less financially viable and keeping its market share, albeit at a reduced price.
“The strength of the pound against the dollar is also important as fuel, like oil, is traded in dollars, but having suffered a big drop in the value of the pound after the Brexit vote the new norm seems to be a pound that is consistently worth $1.24. The absence of any further significant downward movement should mean fuel prices will be mostly decided by the oil market.”