Oil prices fell yesterday after Donald Trump dragged America out of a global agreement to combat climate change.
Crude tumbled below $50 a barrel to as low as $48.95 after the president decided to pull the United States out of the Paris accord.
Trump’s move sparked speculation the US would ramp up production even more aggressively amid a shale gas revolution.
No deal: Crude tumbled below $50 a barrel to as low as $48.95 after US president Trump decided to pull the United States out of the Paris accord
It is already producing more than 9.3m barrels a day – close to top producers Saudi Arabia and Russia.
However, the falling price is expected to be passed on to motorists who could see the price of fuel hit 110p a litre.
It will be a boost for struggling families feeling the pinch at a time of rising prices and subdued wage growth.
Simon Williams, RAC’s fuel spokesman, said the oil price tumble would lead to significantly cheaper wholesale fuel prices which retailers would be expected to pass on to consumers.
‘The price of petrol could reduce by 2p a litre in the next fortnight and diesel, which is 3p too expensive on the forecourt, could be brought down further,’ he said.
The average price of unleaded is 116.7p a litre and diesel 117.8p.
Oil prices have been under pressure because output has outstripped demand and created a global glut.
An Opec agreement to curb production has only recently started to slow the global stockpile – but has incentivised the US to step output up.
‘US oil producers have thus offset roughly half of the Opec cuts,’ said analysts at Commerzbank. ‘Now that US president Trump has announced the US will be withdrawing from the Paris Climate Agreement, it is expected that the US will expand its oil production even more sharply.’
It came as the FTSE 100 reached a new record high yesterday, amid signs the economy has picked up in recent months.
At one point it soared to 7595.23, but closed up 0.05 per cent, or 3.86 points, to 7547.63.
The rise will be a boost for British savers with money tied up in the FTSE, with almost £400billion added to the value of blue chip firms since the low after the Brexit vote.
The fall in the pound since Brexit has boosted the value of overseas earnings for multinationals in the top flight.
However, it follows a turbulent week for sterling as investors struggled to understand wildly different poll predictions for next week’s general election.
Ryan Hughes, fund manager at AJ Bell, said: ‘Despite the emotional over-reaction to the Leave vote which saw the market fall sharply, investors have remembered that the UK now does more trade with the rest of the world than it does with the EU.’
The latest surge came as builders reported construction growth had rebounded to a 17-month high in May.
Tim Moore, at research firm IHS Markit, said: ‘A sustained rebound provides an encouraging sign that the recent soft patch for property values has not deterred new housing supply.’
This followed strong figures from industry which revealed manufacturers are hiring staff at the fastest rate in three years.
Sterling’s drop has made British firms more competitive by allowing them to undercut rivals abroad, as well as improving domestic sales by forcing up prices of goods from overseas.
IHS Markit found that employment in manufacturing climbed for the tenth month in a row. It is now increasing at the fastest rate since June 2014.