Fuel prices cut as oil cost falls
Petrol prices look set to fall from near-record levels after market turmoil and global recession fears caused a big drop in the cost of oil.
Asda has already said it will cut prices by up to 2p a litre at its 188 filling stations from Wednesday, with other supermarkets likely to follow suit.
Standard & Poor's decision to lower the US credit rating - a blow to confidence that could hurt economic growth and demand for oil - has resulted in Brent crude falling 3% to 105 US dollars (£64) a barrel.
Despite the recent slump in oil prices, the AA said the average cost of unleaded petrol on Sunday stood at around 136.5p a litre, just a penny short of the record seen in May. Diesel is currently priced at more than 140p a litre.
The last round of cuts came in June when oil prices tumbled due to the opening of emergency reserves by the International Energy Agency.
AA head of public affairs Paul Watters described Asda's decision to cut prices as particularly welcome, although he warned that stock market speculators could quickly drive the price of oil back up.
He added: "The AA says drivers deserve a longer respite from near-record fuel prices during the holiday period, but nobody should underestimate the ability of so-called 'sentiment' in the commodity markets to drive prices back up again."
The high price of petrol has been blamed for a further squeeze on household spending power at a time of difficult conditions on the UK high street.
Oil prices have tracked the slide in stock markets, with New York listed crude down to 85 US dollars a barrel from 100 US dollars last month and 115 US dollars in May.
Investors are concerned the first-ever US debt rating downgrade will batter already weakening consumer confidence and hurt economic growth.