Oil prices ease

Oil prices fell back from record levels today amid hopes of higher US stockpiles of oil and petrol.

Tension between Turkey and Kurdish rebels on the Iraq border – as well as speculative buying by oil traders – helped prices rocket to new records yesterday, threatening even higher petrol bills for motorists.

Light sweet crude for November delivery fell back from a record close of 87.61 US dollars a barrel amid hopes that US Energy Department figures would show oil and petrol stockpiles had increased by one million barrels last week – easing price pressures.

But the AA motoring organisation warned of a “dismal start” to the winter for drivers today despite oil prices slipping from record levels.

A spokesman said: “All we can do is keep our fingers crossed. There is still the general problem of oil inventories in the US being below what they should be.

“With these pricing pressures the only way that petrol prices are going to go is up.”

“It is a pretty dismal start to the winter as we move into winter motoring, which uses up more petrol.”

AA figures from Monday showed drivers in Scotland enjoying the cheapest average petrol prices at 96.5p per litre, while London and East Anglia were nearly 2p dearer.

The spokesman added that £1 a litre costs were already a reality for many drivers in rural areas, which needed to charge higher levels to survive.

Motorists have already been paying a 2p plus VAT rise in fuel duty per litre of petrol since the beginning of October.

In London, Brent crude for December delivery eased 25 cents lower from a close of 83.55 US dollars.

Oil prices have surged after recent reports from the US Energy Department, the International Energy Agency and the OPEC oil cartel suggesting oil supplies are flat or falling as demand is growing.

The recent threats of military action by Turkey has pushed prices still higher and encouraged speculation by oil traders.

Despite the gains, the price of oil is still below inflation-adjusted highs hit in early 1980. Depending on the adjustment, a barrel of oil costing 38 US dollars in 1980 would be worth between 96 and 101 US dollars or more today.