Warm winters in the US have seen the price of oil fall to just under $56 a barrel – the lowest price in the past two years.
The warmer than expected winter meant that the demand for distillate oil, the oil used for transport and heating, was reduced and the surplus stock have translated to lower oil prices.
On the New York Mercantile Exchange the price of oil dropped $2.73 to $55.59 a barrel, its lowest price since June 2005. In London, Brent crude fell $2.85 to $55.11 a barrel.
Analysts have reported that demand for heating oil has been 30 per cent below expected levels, resulting in distillate oil stocks rising by two million barrels, a higher rate than expected.
The price drop has already translated to savings for the consumer with discount supermarket Asda announcing that it will be cutting the price of diesel by 1.5 pence per litre to 89.9 pence per litre. Unleaded petrol is down to 85.9 pence per litre.
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