Asda slashes 3p from fuel prices

Are fuel prices set to fall further?

A petrol price war could break out in the UK after two leading supermarkets cut the price of fuel.

Asda announced it is shaving 3p off the cost of a litre of unleaded petrol - cutting the price to 76.9p.

The Wal-Mart owned group said the move was in response to an over-supply in the market, however it did add the reduction would not apply to diesel.

Meanwhile, in response to the move, Tesco said "it would not be beaten" and pledged to cut its prices as well.

"We won't be beaten on the price of fuel in any location and prices in our stores will fall from tomorrow (Wednesday)," a spokesman for Tesco said.

Pump war?

The move could spark another round of price cutting on petrol station forecourts, almost one month after Morrisons triggered a pump war reducing the price of unleaded petrol by 3.5p to 79.9p per litre.

Analysts said the fall in oil prices from record highs last year was probably the cause of the reductions.

"There is an oversupply of gasoline that has driven (international) prices down a lot," an Asda spokesman said.

"Our aim is always to be the first to drop prices when our costs fall - we do this across the whole of our business without exception," Asda trading director Paul Mancy added.