South African motorists can expect further increases at the pumps in August, on the back of higher oil prices, and despite a stronger rand.
Mid-month data published by the Central Energy Fund (CEF), shows that if market conditions persist at current levels, motorists can expect a price hike of around 34 cents per litre of petrol, and 68 cents for diesel next month.
The projected price changes would follow sizable hikes over the past two months, with petrol having increased by R1.72 per litre, and diesel by R1.73 per litre in July.
The rand/dollar exchange rate – also a big factor in determining local fuel prices – has worked in South Africa’s favour in the month to-date, undercutting some of the increases seen due to climbing oil prices.
After hitting almost R19.00 to the dollar during the nationwide lockdown, the rand has staged a significant recovery, dipping below R17.00 against the greenback in recent sessions.
It strengthened further on Tuesday as US data helped to bolster some risk appetite, said Bianca Botes, executive director at Peregrine Treasury Solutions.
The local unit was at R16.63 in mid-morning trade on Wednesday.
“While the rand is likely to make further gains on global data showing a lessening in the weakness of Q2.2020’s economic performance, this does not mean there will be a steady recovery, and the domestic currency will remain volatile,” Investec chief economist Annabel Bishop warned in a note.
Oil edged higher this week after a report pointed to a drop in US crude stockpiles and on signs that additional supply from OPEC+ next month won’t be as much as previously anticipated, Bloomberg reported.
Futures in New York traded near $40.50 a barrel, while Brent Crude was at $43.45 per barrel.
The American Petroleum Institute reported that US inventories fell by 8.32 million barrels last week, according to people familiar with the data.
That would be the largest drawdown since December if confirmed by official figures due Wednesday, suggesting a supply glut is easing.
For Brent, the market structure indicates that while there’s still some concern about over-supply, it’s eased slightly, Bloomberg reported.
These are the expected changes at mid-June:
- Petrol 93: Increase of 35 cents per litre
- Petrol 95: Increase of 33 cents per litre
- Diesel 0.05%: Increase of 68 cents per litre
- Diesel 0.005%: Increase of 67 cents per litre
- Illuminating paraffin: Increase of 63 cents per litre
This is how the prices will be reflected at the pumps:
|Fuel (Inland)||July Official||August Expected|
|0.05% Diesel (wholesale)||R13.03||R13.71|
|0.005% Diesel (wholesale)||R13.07||R13.74|