Motorists can expect fuel prices to drop in November, with month-end data from the Central Energy Fund showing over-recoveries for all grades of petrol and diesel.
The CEF’s data shows that petrol is showing an over-recovery of 24 to 27 cents per litre, while diesel is showing an over-recovery of around 11 cents per litre.
Illuminating paraffin, meanwhile, is showing an under-recovery of 15cents per litre, making it the only fuel that is expected to see a price increase.
The Department of Energy is expected to publish the official changes ahead of the new prices coming into effect on Wednesday, 4 November.
South African petroleum costs have been positively impacted by both a stronger rand and a lower oil prices over the last month.
While the rand has pulled back in sessions since the tabling of the medium term budget, earlier this week, the dollar has remained under persistent pressure throughout the month.
Dollar weakness is largely due to political anxiety ahead of the US presidential election being held next week – while other currencies like the euro and the British pound have faced headwinds from a second wave of Covid-19 infections in the region, leading to more restrictions on many Eurozone economies.
The rand, as a result, has benefited, pushing past a few resistance levels and moving to a six-month best of R16.18. However, following the poor economic outlook presented in the MTBPS, which revealed a growing budget deficit with little room for government to manoeuvre, the rand has lost ground.
Economists and analysts have raised concern over the country’s finances, noting that the budget contained nothing new – to push economic reform – and instead relies too heavily on cutting government spending in areas – such as the public wage bill – where the desired outcome is unlikely amid union pressure.
The rand softened to R16.47 as a result. However, despite this weakness, the average exchange rate over the last month remains lower than previously.
International petroleum product prices are largely affected by movements in oil prices, which have decreased substantially over the last month. Oil is poised for the biggest monthly slide since March on concern a resurgent pandemic in the US and Europe will keep people hunkered down, crimping demand for auto and aviation fuel, Bloomberg reported.
Futures have tumbled almost 12% this month in New York and they’re near the lowest since late May in London.
“It’s all about Covid-19 now and its impact on consumption,” said Jeffrey Halley, a senior market analyst at Oanda Asia Pacific.
Next week’s US election promises more volatility before an OPEC+ meeting at the end of November, when members will decide whether to delay the planned easing of output cuts, Bloomberg said.
This is how the expected prices could reflect at the pumps from Wednesday:
|Fuel (Inland)||October Official||November Expected|
|0.05% Diesel (wholesale)||R12.37||R12.26|
|0.005% Diesel (wholesale)||R12.38||R12.28|