By Lehlohonolo Lehana.
The mid-month data from the Central Energy Fund shows that motorists could see a significant petrol and diesel price cut in September.
The data, which serves as a snapshot of market conditions as of 12 August 2022, shows that the petrol price could drop by as much as R2.60 litre next month, while diesel is showing an over-recovery of R2.30 per litre.
The mid-month snapshot is as follows:
- Petrol 95: over-recovery/decrease of 260 cents per litre;
- Petrol 93: over-recovery/decrease of 244 cents per litre;
- Diesel 0.05%: over-recovery/decrease of 230 cents per litre;
- Diesel 0.005%: over-recovery/decrease of 225 cents per litre;
- Illuminating Paraffin: over-recovery/decrease of 193 cents per litre
The Department of Energy has stressed that the daily snapshots are not predictive and do not cover other potential changes like slate levy adjustments or retail margin changes, which are determined by the department at the end of the month, taking all variables into account.
The DoE makes adjustments based on a review of the entire period. Furthermore, the outlook can change significantly before month-end.
The expected price changes are contingent on current market conditions persisting through to the end of the month. Notably, even if these changes come into effect, fuel prices are still much higher than they were in February before the impact of the Russian invasion of Ukraine was felt in global markets.
Local fuel price fluctuations are impacted by two main factors – the international price of petroleum products, driven mainly by oil prices, and the rand/dollar exchange rate used in purchases of these products.
For the first two weeks of August, oil prices stayed below $100 a barrel, contributing to a significant over-recovery in local prices. This was supported by a stronger rand versus the dollar, which also contributed to an over-recovery, albeit much smaller.
Crude has been whipsawed by a flurry of both bearish and bullish headlines in recent days. Yet cooling inflation that may ease the pace of interest-rate hikes by the Federal Reserve has supported commodities broadly, Bloomberg reported.
Brent crude was trading around $97 a barrel on Monday morning.
Crude has ticked lower over the past couple of months on concerns about an economic slowdown, shedding all the gains put on following Russia’s invasion of Ukraine. Money managers have cut their bullish bets on oil to the lowest in over two years, according to the Commodity Futures Trading Commission.