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Oil price crashes to 20-year low

Fuel prices were softening at a key time when farmers were playing catch-up after the wet winter but they have not yet tumbled in line with oil prices. 

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Oil price crashes to 20-year low

The crude oil price began the year at about US$60 a barrel (£48/barrel), but the coronavirus crisis has seen values drop to a low of US$20/barrel (£16/barrel) in the last two weeks for the first time in more than 20 years.

 

Meanwhile average red diesel prices have fallen below 60ppl for the first time in nearly two years but they are still much higher than in early 2016 when prices were at 40ppl a long way off the lows of early 2016 when oil prices were at US$50/barrel (£40/barrel)


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Disconnect

 

Spencer Hill, fuel manager at AF said, “There is a bit of a disconnect between crude and refined products due to tax and duty at fixed rates.

 

“Will we see a further fall in market prices? Impossible to say for definite as demand has been reduced greatly but supply has stayed strong with OPEC (OPEC is the correct terminology, The Organisation of the Petroleum Exporting Countries) and Russia battling to keep market share and hurting the US shale oil in the process.”

 

Mr Hill said the exceptional circumstances have increased delivery times to about 10 days for commercial fuel and a little more for domestic.

 

Peter Collier, analyst at AHDB explained the falling oil price has had a negative impact on oilseed prices. With nearly 40 per cent of US maize grown for fuel, lower oil demand and prices has spilled over into the global oilseed market.

 

He said: “The increasing use of maize for fuel use has led to the linking of not just oilseeds, but global grains, to the crude oil market and global economy.

 

Paris rapeseed futures had fallen by 20 per cent from their January peak by the middle of March but have edged up since then in volatile trading and in response to higher grain prices.

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