Local fuel prices drop below $1.00

A global oversupply has pushed the price of crude oil to below $US50 per barrel for the first time in five-and-a-half years, reducing the pump price in metropolitan Sydney to below $1.00 per litre for E10 ULP.

It's the first time in six years Sydneysiders have enjoyed petrol prices of less than a dollar, though other states have been slower to pass on the savings. Melbourne metropolitan fuel prices are today hovering at an average of 111.3 cents per litre (CPL) for regular unleaded, while Brisbane sits higher at 114.9CPL, Perth lower on 109.1CPL and Adelaide lower again at 107.7CPL.

The drop in pump prices comes as fuel distributors pass on savings from a global oversupply. An increase in the production of oil from American shale and Canadian tar sands, married to a softening in demand from China, has failed to impact the steady supply from major oil producing nations, predominantly in the Middle East.

Saudi Arabia, the world's principle oil exporter, indicated it would maintain current production rates in a bit to retain its dominant market share, adding that supply would be maintained at current levels until such time as other suppliers cut production. By maintaining oil production at current levels, the OPEC nations anticipate lower pump prices, which would make America's domestic production relatively uneconomical and possibly drive North American consumers and supply chain back to foreign producers.

The situation, although a boon for current pump prices, could, however, force economic pressures through global stock markets, and with some analysts forecasting a barrel price of $US35 before oil prices recover, we're bound to see some instability in prices – and perhaps supply – ahead of any market normalisation.