CRUDE oil prices crashed to their lower levels on record this week.
So what exactly is happening in the oil market and will this translate into lower prices at the pumps?
For the first time in history US oil futures prices traded at a negative price.
US West Texas Intermediate crude for May delivery traded at minus $2.58 a barrel this morning. This means traders were paying other traders to buy an oil contract off them.
Traders had bought oil but as the deadline arrived today for paying the full price for the oil they were desperate to avoid taking physical delivery of crude oil that has no immediate market value.
Global demand for oil has crashed due to international lockdowns in response to the pandemic.
This has seen a glut of oil and a chronic of shortage facilities for crude oil.
Global benchmark Brent crude, which is the benchmark in Europe, also fell in response to the collapse.
Motorists are likely to see petrol and diesel prices at the pumps fall further after the crash in crude prices this week crude prices fell 300pc in the past few days.
Experts said that despite the fact that tax makes up most of the cost of petrol at the pumps will keep falling through to the summer.
Analyst Paul Sommerville said there is likely to be further falls in prices at the pumps due to the upheaval in wholesale markets. He said that if futures contracts continue to be priced down this would be good for motorists.
“There is major change in the prices of crude oil which should translate into petrol prices falling at some point,” the chief executive of Sommerville Investment Markets said.
He said the fall in crude prices was positive for Europe which has to impost much of its oil, unlike the US.
Chris Weafer, an Irish economist based in Moscow and chief executive of Macro-Advisory, said the decision by oil producers to pay buyers take surplus oil was extraordinary.
Mr Weafer said there is a serious problem in the oil market and the price of oil is likely to remain low, and go lower, over the next several weeks and months.
This is because the demand for oil has collapsed while there is also a supply glut.
“The price of oil is likely to remain low and go lower. This should mean cheaper oil at the petrol pumps,” he told RTE’s ‘Morning Ireland’.
However, he stressed that much of the price paid by drivers is accounted for by taxes and levies imposed by the State.
Crude makes up between 20pc and 25pc of the pump price, according to AA Ireland.
Taxes and levies account for more than 60pc of the price at the pump.
The price of petrol a the pumps dropped by 19c between early February and early April, according to the Irish Petroleum Industry Association (IPIA), the representative body of those companies that import, distribute and sell petroleum products.
Prices per litre have dropped to €1 in some European countries, a prospect that now cannot be ruled out in this country.