Supermarkets move to cut petrol

Oil prices have been falling sharply

Supermarket chain Tesco has followed Asda after saying it would cut petrol and diesel prices at its forecourts.

Tesco said it would cut up to 2p per litre on diesel after Asda announced a cut of 1.5p a litre to 89.9p.

Both firms will also cut prices of unleaded petrol - Tesco's planned cut is 1p per litre and in Asda's case a modest 0.2p to a price cap of 85.9p.

The move follows falling oil prices on both sides of the Atlantic as the mild winter reduces demand for heating oil.

A spokesperson for Tesco said: "We've seen further reductions in wholesale costs so we'll be dropping prices to pass on the benefits to our customers."

Heating oil

Andy Brem, from Asda, said: "The unseasonably mild weather so far this winter has reduced heating oil consumption across Europe and the US.

"This, combined with a fall in the price of crude oil, has helped push prices lower."

Asda, which has 167 petrol stations, said its diesel is now at its cheapest for more than a year. Prices for diesel are normally higher during January because of its use in heating.

Oil reached a peak of $78 for a barrel of US light crude in July, driven by the conflict in Lebanon and ongoing high demand spurred by China, but has since fallen as geopolitical tensions have eased.

Oil cartel Opec has said it will take action if prices continue dropping.