Supermarkets are cutting the cost of their fuel again – and prices could fall still further, it is claimed.

Asda and Morrisons will tomorrow reduce the price of petrol and diesel by 2p a litre.

It means Asda customers at the firm’s Bradford Road store in Huddersfield will be paying no more than 105.7p a litre for petrol, with diesel at 112.7p a litre.

It is the 14th time since September that Asda has cut the price of fuel – with 21p a litre coming off its petrol price in total and 17p a litre off its diesel.

For Morrisons, it is the seventh cut since the beginning of December.

The lower prices compare with typical prices around Huddersfield of 110.9p a litre for unleaded and 117.9p for diesel.

Bernard Stern, of Huddersfield-based independent petrol retailer CJ Stern (Oils) Ltd, said other retailers were likely to follow suit and claimed: “Prices have a little bit further to fall depending how oil prices go over the next few weeks. It is certainly good news for motorists.”

Mr Stern said the major supermarkets – which account for 40% of the petrol retail market – were able to cut prices because “the margins are there to do it”.

He said they were also cutting prices to help them compete against discounters such as Aldi and Lidl, who are taking a bigger share of the grocery trade, but do not have petrol forecourts.

You'll be able to get unleaded for 105.7p a litre
 

Mr Stern said the major factor dictating prices was that the US was almost self-sufficient in terms of fuel. “Producers in the Middle East and Russia have a large surplus of fuel, which is driving the price down,” he said.

Motoring organisation the RAC predicted that petrol could dip as low as £1 per litre, although the AA was more sceptical.

RAC fuel spokesman Simon Williams said that the latest cuts would further lower the average price of petrol, which is now cheaper than it has been for about five years.

Mr Williams said: “The cuts are bringing us ever closer to the £1-per-litre average for petrol. Of course, it would also be an extremely welcome move for motorists and businesses alike.”

AA president Edmund King said: “Further drops in the pump price are extremely welcome. However, small rural towns are again being left behind by the price falls in the more competitive areas.”

“This continues to feather the fall in the national average. We would love to see £1 per litre and we may possibly see it in many parts of the UK, but it is unlikely that the average price will drop as quickly to the £1 level - partly because 70% of the price is tax.

“There is still a price lottery out there so we advise drivers to shop around.”