Supermarkets cut fuel prices again after one Birmingham station goes under £1/litre

Asda sparked the petrol price war after announcing it will cut unleaded and diesel prices by 2p/litre from tomorrow. As it sets a national price cap across all of its 245 forecourts, drivers will pay no more than 110.7p/litre for diesel and no more than 103.7p/litre for unleaded.

Asda says the cut means petrol prices at its forecourts are at a new five-year low and adds that since September last year it has slashed prices 15 times, taking 23p/litre off unleaded and 19p/litre off diesel.

Morrisons was quick to follow suit and announced that from tomorrow, it will reduce the price of unleaded and diesel by up to 2p/litre at all of its 332 forecourts, adding that this is the eighth time it's cut prices in just six weeks. However, unlike Asda, Morrisons petrol prices will vary regionally.

Then Tesco joined the race as it announced it will cut unleaded and diesel by 2p/litre at all of its 500 forecourts from this afternoon.

The supermarkets say they're able to cut prices due to the continuing fall in oil prices, with the cost of a barrel having dropped from about $115 six months ago to a current price of less than $50.

In December the RAC predicted that falling oil prices would see the price of fuel fall to an average of £1 a litre in January, and over the weekend, a service station in Birmingham is believed to have become the first in the UK to have slashed petrol prices below the £1p/litre mark.

Over the weekend, a Harvest Energy station in Birmingham cut the price of unleaded to 99.7p, which the RAC says is the first time since 2009 that the cost of filling up has been so cheap.

MoneySavingExpert.com has asked Sainsbury's if it also plans to cut prices and we will update this news story as soon as we hear anything.

However, tomorrow's price drop doesn't necessarily mean that Asda is the cheapest fuel provider for you. To find the lowest price in your area, use the website Petrolprices.com and see our Cheap Petrol and Diesel guide for more ways to save when filling up your tank.

According to the latest figures from Petrolprices.com, the average UK price for a litre of diesel was 116.71p/litre on Sunday, while the cost of unleaded petrol stood at 109.58p/litre.