Oil below $70 spurs cut in petrol prices

London Brent crude lost another $1.30 to $69.50. Oil giant BP and supermarkets chains Asda and Morrisons cut the price of a litre of unleaded petrol to a symbolic 99.9p, and Sainsbury's said it would follow suit today.

Motoring bodies welcomed the cuts, but said more were needed. Oil has been on the slide since spiking at an alarming $147 in July, when the talk was of runaway demand from China and other emerging markets.

Some predicted an oil panic, with a barrel rising to $200 or more before long. While a fall in oil costs would normally be welcomed, the cause is fear of a dramatic global slump.

David Moore at Commonwealth Bank of Australia said: "The market is just very worried about a severe international economic downturn."

Opec says developing countries are using a million fewer barrels a day than a year ago. Adrian Tink, RAC motoring strategist, was thankful for the cuts in petrol prices.

"Finally, we have a bit of respite for Britain's hard-pressed motorists," he said. "For the past year, they have been paying over £1 a litre for petrol. This has hit Britain's motorists hard in a tough economic climate, with the average motorist spending over £1300 a year to fill their tank.

"At least that figure should start to come down now and motorists will see a significant difference in their wallet when they next visit the forecourt."

Asda also reduced the cost of diesel from 116.9p a litre to 110.9p. A litre of diesel at Morrisons was cut to 111.9p, as was a litre of diesel at BP service stations.

AA president Edmund King said the government should not use the cuts as an excuse for a rise in fuel duty.

"We suspect that these new prices are right on the edge of, if not below, the point that retailing petrol remains profitable," he added.