Motorists in South Africa can expect a mixed bag in petrol and diesel prices changes for December, with the latest data from the Central Energy Fund (CEF) showing that petrol will go up, while diesel users will enjoy a happier festive season with prices set to decline.
According to the CEF, petrol prices are currently showing an under-recovery of 7 cents and 11 cents per litre for 93 and 95 grades of petrol respectively, pointing to an increase next month.
Diesel, however, is showing an over-recovery of 18 cents for both 0.05% and 0.005% sulphur content, implying a price cut is on the cards.
Mid-month expected changes are as follows
- 95 petrol: increase by 11 cents per litre
- 93 petrol: increase by 7 cents per litre
- 0.05% diesel: decrease by 18 cents per litre
- 0.005% diesel: decrease by 18 cents per litre
- Illuminating paraffin: decrease by 21 cents per litre
The main driver behind the changes is the fluctuating price of international petroleum products in the first half of the month, which has climbed for petrol and dropped for diesel.
International petroleum prices are largely driven by changes in oil prices, but petrol and diesel follow different refining processes from the base material, accounting for the big differences in price. Other price factors include demand, taxes and seasonal changes.
The basket used in petrol production has increased in price, while the basket used for diesel production has decreased in the first half of the month.
After dipping below $60 a barrel in October, crude oil prices have lifted slightly with a barrel of crude now costing over $62.
Oil prices have stabilised after Saudi Arabia recovered from attacks on oil refineries in September and October, with international producers also building their inventories. However, concerns remain over the US-China trade war, and it potential impact on oil demand.
The other component factoring into price changes is the rand/dollar exchange rate, which has proven to be relatively stable in the first half of the month, though climbing back towards R15 to the dollar.
The rand spiked sharply against the dollar near the end of October, following a bleak mid-term budget policy speech, but has since recovered slightly with more favourable international news.
Specifically, news of the US and China easing up on their trade war reinvigorated the market, though uncertainty persists which means volatility will resist for the rand.
Risks remain looking at the month ahead, particularly around impeachment hearings against US president Donald Trump, which are currently playing out.
Locally, we also have to deal with strike action and other operational crises at state-owned companies, which has put local markets on shaky ground.
As things currently stand at mid-month, this is how petrol prices in December could look:
|Fuel (Inland)||November Official||December Expected|
|0.05% Diesel (wholesale)||R14.68||R14.50|
|0.005% Diesel (wholesale)||R14.75||R14.57|