Cheap oil doesn't mean cheap petrol

First and foremost, remember, prices at the pump are not a perfect reflection of the oil markets. When crude oil first started to crater over a month ago, due to fears of a supply glut and demand destruction from the coronavirus pandemic, supermarkets such as Morrisons (MRW.L) and Walmart’s (WMT) Asda repeatedly reduced their fuel prices, even in cuts of 12p per litre for petrol and 8p per litre for diesel. The issue is that the market is oversupplied and demand has cratered because production, travel, and a number of industries are frozen due to the coronavirus pandemic. At the moment, storage facilities are filled up and there are about 160 million barrels of oil sitting on tankers waiting for buyers. Petrol and diesel prices include government taxes and a profit margin for the seller. The physical asset value isn’t the direct translation to what we see at the pumps and in a major downturn, companies will be looking to recoup losses.