The price of oil crept up yesterday on the first day of trading since upbeat US job numbers last Friday. However, the jump is likely to put further pressure on petrol prices in the UK as motorists prepare for near-record prices at the pumps.
US light crude added as much as 0.4 per cent yesterday, climbing to $85.31 (£55.85) a barrel, while London Brent crude also jumped by nearly half a percentage point, reaching $84.37 (£55.23). The increases came on the first day of oil trading since the Easter holidays, and after the US Department of Labor said last Friday that the American economy had created 162,000 new jobs in March – the highest monthly number for two years, adding to growing sentiment of an improving US economy.
But the increase in oil prices is also likely to lead to higher petrol prices in the UK. Motorists are also now paying the 1p increase in fuel duty that came into effect last week. Chancellor Alistair Darling said during the Budget that a planned 3p rise in fuel duty would be phased in, with a further 1p increase scheduled for September, and a 0.76p hike in January next year.
Last week, motoring groups warned of record petrol prices on the forecourts.
"Worryingly, it's now a case of when, rather than if, the record petrol prices will be broken," said Adrian Tink, a motoring strategist at the RAC, last week. Petrol has reached 120p a litre at some garages in recent days.
The increase at the pumps is also likely to catch the attention of the Bank of England's monetary policy committee (MPC), which begins its two-day deliberations tomorrow on whether to increase interest rates. The Bank rate has been at a record low of 0.5 per cent for more than a year. Analysts are expecting the MPC to maintain rates, despite the inflationary pressure.