Oil

BBC

Oil prices are getting close to $80 barrel.

On Wednesday prices rose as data showed that the US stockpile of oil had fallen significantly in the week to 7 September.

There's also continued concern that looming sanctions against Iran will cut supply.

Add to that worries over Hurricane Florence which is due to hit the US East Coast on Friday, then you've got plenty for the market to fret about.

North Sea Brent crude is up 30 cents a barrel at $79.36 a barrel.

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Oil & Gas UK, the association is releasing its annual economic report on the industry today and activity is slow to say the least.

Oil & Gas UK's chief executive Deirdre Michie tells BBC Radio 4's Today programme: "Over the years we have seen quite a decline in the drilling activity generally, whether it is exploration or development.

"Years ago we would have seen those numbers up in the 20s to 30s in exploration terms and development into the 80s to 100s so when we're seeing these numbers, especially in exploration that is a real concern, as our report has highlighted."

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Oil prices have dipped after emerging market turbulence over the past days while a deadline nears for a potential new round of US tariffs on another $200bn of Chinese goods.

However, US sanctions against Iran have prevented prices from falling further as they are expected to tighten the market after being implemented from November, traders said.

Brent crude futures fell 0.18% to $77.23 a barrel.

US West Texas Intermediate crude futures were at $68.60 per barrel, down 0.17%.

BBC

So what's going to happen with the oil price with Brent crude now trading at $71.37 a barrel.

Looking at the global market Portland Fuel's James Spencer, says: "I think it is quite interesting at the moment. I'm not going to say it is on a knife edge - it's not quite as exciting as that - but obviously it has gone up to $80 a barrel it is now back to $70 a barrel.

"We haven't seen the actual operational impact yet of the Iranian sanctions...we're going to see that at the back end of this year. That really has the potential to send prices high but at the same time the rig count in America is ticking up like some kind of ticker tape. Every week there are more rigs coming on, fracking, getting the shale out of the ground so I think it is evenly balanced at the moment."

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Fuel tax in the UK can also create a huge disparity between oil and petrol prices.

James Spencer, managing director at Portland Fuel, says: "People will always point back to when crude oil prices went from $115 to $25 a barrel and people looked at the pumps and said 'but the fuel price only came down by around 10p per litre or 20p per litre'."

There are also differences between the service stations where people fill their cars up.

He tells Wake Up to Money: "Service stations would point to the fact that they have to be open 24 hours, that they have to provide public toilets."

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If oil prices are falling, petrol prices should also fall, right?

Not so, says James Spencer, managing director at Portland Fuel, who explains to Wake Up to Money that it is all about the value of the pound against the dollar - petrol is priced in sterling and oil is traded in dollars.

"So, if you just go back to the beginning of July, the pound was trading against the dollar at about $1.33," he says.

"It doesn't feel like a large drop but what that would do ordinarily is it adds about 2p per litre to the price so if the wholesale price of petrol stayed completely constant, just the movement of $1.33 down to $1.27 would add 2p per litre."