A tiny drop of petrol prices expected in the month of July.

Staff Reporter.

Mid-month data from the Central Energy Fund points to another small drop in petrol prices in July – though diesel vehicle owners can expect a further hike.

The CEF data shows an over-recovery for both 93 and 95 petrol, with prices expected to drop between 3 and 6 cents per litre. Diesel drivers, meanwhile, can expect an increase of around 19 cents per litre for 0.05% and 0.005% sulphur.

  • Petrol 95: decrease of 6 cents per litre;
  • Petrol 93: decrease of 3 cents per litre;
  • Diesel 0.05%: increase of 19 cents per litre;
  • Diesel 0.005%: increase of 19 cents per litre;
  • Illuminating Paraffin: increase of 14 cents per litre.

While the mid-month data serves as a snapshot, the Department of Energy makes adjustments based on a review of the full period. Furthermore, the outlook can change significantly before month-end.

The mid-month prices provide a strong indication of moving trends, however. Prices are affected by two main components – the rand/dollar exchange rate, and changes to international petroleum product costs, largely driven by oil prices.

At mid-June, the stronger ZAR/USD exchange rate is contributing to an over-recovery of around 23 cents per litre – however, changes to international product prices are swallowing up the bulk of those gains, leading to diverging trends for petrol and diesel.

Product prices for petrol have increased, contributing to a 17 to 20 cents per litre under-recovery in the price. Prices for diesel and illuminating paraffin are showing a 42 cents and 35 cents per litre under-recovery.

The rand has enjoyed an extended strong run against the US dollar over the last few weeks, hitting its strongest point in two years at R13.42 at the start of June. The unit is currently retreating from this position, but is still stronger month-on-month, sitting below R14.00 to the dollar.

Stronger than expected GDP data and the slow acceleration of the Covid vaccine rollout has been undercut by continued power supply issues and load shedding, as well as South Africa entering its third wave of Covid-19 infections.

Internationally, however, markets were thrust into a risk-on environment – favouring emerging markets – as Covid tensions eased overseas, and central banks in the US and Europe providing inflation data pointing to looser monetary policies, for the time being, spurring positive sentiment.

Commodities have also been in demand across the globe as industries start coming back online and target pre-Covid levels, boosting the rand significantly.

The rand started this week on the back foot, however, as investors have begun to pull out of riskier markets.

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