National petrol pump prices have dipped below $2 per litre for the first time in two and-a-half years, as global supply outweighs demand and oil has slipped below $US70 ($NZ89.85) a barrel.
New Zealand motorists and holiday makers appear set to benefit for some time, after last week's decision by the Middle East cartel, the Organisation of Petroleum Exporting Countries (Opec) to not drop its crude oil production, combined with a relatively stable New Zealand dollar.
Oil prices had this week fallen further in London and New York.
BP yesterday dropped the price of all its petrol grades by 3c per litre, with 91 unleaded selling for $1.99.9 and diesel at $1.32.9c at main centre outlets.
Z Energy also lowered its prices yesterday.
BP communications and external affairs manager Jonty Mills said Opec's decision against cutting its daily production rate had assisted in driving prices down.
''The continued downward trend in the cost of product on the international market continues.
''It's a simple case of supply outweighing demand,'' Mr Mills said.
AA PetrolWatch spokesman Mark Stockdale said there had been 10 cuts since October 10.
Petrol prices had fallen a total 22c per litre, and diesel 19c.
While welcoming the news, he cautioned the exchange rate between the US dollar and kiwi had fallen from US88c in June to US77.4 yesterday, and further falls could affect future price cuts.
Mr Stockdale said international commodity prices were now at their lowest level in more than four years ''and there could be more cuts yet''.
Both the benchmark North Sea Brent crude oil and West Texas Intermediate were under $US70 a barrel at the end of this week; Brent down US28c to $US69.64 and West Texas US57c down to $US66.81 per barrel.
Riyadh has reportedly cut January prices for its crude to Asian and US buyers, as the world's leading exporter defends its market share and, some analysts speculate, seeks to drive high-price producers out of the market, AFP reported.
''A source familiar with official Saudi policy says they have no particular price level in mind and will allow the market to arrive at an appropriate price level,'' Tim Evans, of Citi Futures, said.
That contrasted, he said, with the Saudi stance as recently as May, that it saw $US100 a barrel for Brent as ideal for both exporters and consumers.
