By Robert Harris
RENEWED fuel price rises are feared if oil-producing nations carry out a threat to cut production later this month.
Members of the Organisation of Petroleum Exporting Countries (OPEC) will press for a cut of up to 2 million barrels a day, or more than 5% of production, when they next meet on 17 January.
They hope this will counter an unseasonable fall in oil prices, which have dropped a third since the autumn, due to increased output and mild weather in major consuming nations, especially the USA.
Although the crude price is now close to OPECs $25/barrel target, its members fear the price could fall further in the spring if pumping continues at the present rate.
Red diesel prices tend to mirror crude prices, so some of the $60/t reduction in gas oil prices which has filtered through could be reversed.
The price of red diesel has recently dropped 6-7ppl to about 20ppl.
“The betting is on upward pressure,” said one analyst.
“OPEC is likely to cut production, cold weather is now hitting the USA, while the Bank of England is more likely to cut interest rates following the recent US cut.”
This could erode the strengthening of the Pound against the Dollar, adding to costs.
Bulk derv prices, which have fallen 10% since mid-November, could also be hit, says John Ringwood, product manager at co-op ACT.
There is concern that politically sensitive garage forecourt prices, which have also dropped recently, could be protected at the expense of bulk (and red diesel) supplies.
This appeared to happen in the autumn, when haulage firms were paying more than private drivers, says Mr Ringwood.
“It is possible that the oil companies held down retail prices artificially,” agrees a Freight Transport Association spokesman. That must not happen again, he adds.