Crude oil prices fall across the globe British retail giants

As crude oil prices fall across the globe British retail giants such as Tesco and Sainsbury’s have decided to cut retail fuel prices for their customers. Petrol prices have dropped by 2p and diesel has come down by about 1p. Tesco decided to drop its fuel price on the 11th of December. Sainsbury’s has dropped petrol prices for the fourth time in the past two weeks alone.

Average fuel prices at supermarkets across the country are now 119.4p a liter of petrol. This is the lowest oil prices have gone since the year 2010. A major reason for this is the sudden and Sainsbury's petrol station decline in crude oil prices since the Organisation of Oil Producing Countries (OPEC) decided to maintain its productions levels at 30 million barrels a day. Crude prices have touched $63 in recent weeks and are expected to fall even further to $40 by some experts. Add to this the decline in demand as vehicles egg more fuel efficient and the pound maintaining its strength at $1.5, consumers across the nation can expect historically low prices for fuel from local supermarkets in the coming months.

The effects on the country’s largest supermarket operator Tesco of these declining fuel prices is still unknown. The company has lost over £2 billion in market value since the start of the year and has been the biggest decliner on the FTSE 100 so far. The company has issued profit warnings in all four quarters of the past year and has seen investors sell stock like never before.

Meanwhile a major stake in J Sainsbury’s is being sold by activist in event firm Crystal Amber. Crystal Amber is planning on selling parts of the grocer to a investment fund based in the US and also restructuring debt to add to liquidate its positions and allow it to make other investments.

Investors have kept a close eye on both companies over the past year as Tesco’s falling share price has fueled concerns. The dividend policies of both grocers is being watched closely and the price war between major supermarkets is expected to heat in the coming year as well.