Motorists can expect petrol prices to drop further next month – November 2020, according to mid-month data published by the Central Energy Fund (CEF).
According to CEF’s data, the price of petrol is currently showing an over-recovery of between 14 cents and 17 cents per litre. Diesel, meanwhile, also shows an over recovery of around 20 cents per litre.
An over-recovery points to a decrease in fuel prices, should market conditions persists until the end of the month.
The only fuel to buck the trend is illuminating paraffin, which shows an under-recovery of 5 cents per litre.
- Petrol 95: decrease of 17 cents per litre
- Petrol 93: decrease of 14 cents per litre
- Diesel 0.05%: decrease of 20 cents per litre
- Diesel 0.005%: decrease of 20 cents per litre
- Illuminating paraffin: increase of 5 cents per litre
Local fuel price changes are affected by two main components – international petroleum product prices, and the rand/dollar exchange rate over the period.
Despite a peak above R17 to the dollar at the end of September, the rand/dollar exchange rate has settled into a narrow range below that level for much of October.
The rand has been trading in a R16.40 to R16.75 range for much of the month, largely moving on international factors, rather than any local events.
Global markets have been tied up in the US presidential election which is currently taking place and set to culminate on election day, 3 November. Growing Covid-19 numbers in Europe has also caused jitters in the market.
This is particularly pronounced in the UK, where the government has implemented a three-tier lockdown, again disrupting production in the region.
Locally, the market has its eyes on the economic recovery plan, which will be outlined by president Cyril Ramaphosa on Thursday (15 October). Large parts of this plan have already been published in the media.
Other events keeping investors on edge is the medium-term budget policy statement (MTBPS) which has been delayed to 28 October. Finance minister Tito Mboweni is in the unenviable position to find money to finance many of government’s lofty recovery goals, while also dealing with lower tax income, failing state companies, and rising debt.
International petroleum product prices are largely affected by movements in oil prices, which have increased over the last month. Prices for crude oil have settled in the lower $40 range, currently trading at $41 to $43 a barrel.
This is up significantly from sub-$40 levels this time last month, where prices were down to $38 a barrel from around $44 a barrel in August.
Despite reports and predictions that oil demand would be lower than expected due to international economies still struggling with the Covid-19 pandemic, the American Petroleum Institute (API) reported a much larger draw of oil than anticipated, which has boosted prices.
There has also been a spike in demand from China, which is counter-balancing waning demand elsewhere. Meanwhile, Norway, Libya and operations in the Gulf of Mexico have resumed.
However, despite the upswing, analysts remain cautious and muted on a global oil market recovery, saying that uncertainty still persists in relation to the Covid-19 crisis.
This is how the expected prices would reflect at the pumps:
|Fuel (Inland)||October Official||November Expected|
|0.05% Diesel (wholesale)||R12.37||R12.17|
|0.005% Diesel (wholesale)||R12.38||R12.18|