Here is the expected petrol price for December

Motorists in South Africa can expect a further drop in fuel prices in December, with the latest data from the Central Energy Fund pointing to an over-recovery in both petrol and diesel prices.

Mid-month data from the CEF is currently showing an over-recovery of around 35 cents per litre for petrol and four or five cents per litre for diesel, with illuminating paraffin again bucking the trend and showing an under-recovery.

  • Petrol 95: decrease of 36 cents per litre;
  • Petrol 93: decrease of 34 cents per litre;
  • Diesel 0.05% decrease of 5 cents per litre;
  • Diesel 0.005% decrease of 4 cents per litre;
  • Illuminating Paraffin: increase of 10 cents per litre.

While the mid-month data serves as a snapshot, the Department of Energy makes adjustments based on a review of the full period. Furthermore, the outlook can change significantly before month-end.

Price changes are adjusted so that the over- or under-recovery during the prior month will be corrected in the following month; the over- or under-recoveries are rounded up or down to the nearest full cent so that the effect of rounding contributes to the clearing of the cumulative balance of the individual products on the slate.

However, the mid-month prices provide a strong picture of moving trends. Prices are affected by two main components – the rand/dollar exchange rate, and the changes to international petroleum product costs, largely driven by oil prices.

Exchange rate

The rand has traded stronger against the US dollar in recent weeks, though it has fluctuated according to the whims of international markets more than any significant local data.

The US elections has driven sentiment, where uncertainty over who would claim victory – Joe Biden or Donald Trump – pushed investors into less risky assets. With a Biden victory now all but guaranteed, market tension around the elections are being removed, with appetite for riskier assets now renewed.

Aside from the US election, the rand has also benefitted from two major events relating to Covid-19.

The first being large European economies, including France, Germany and UK re-entering lockdown due to a resurgence of the virus in those regions; and the second being positive sentiment driven by a potential Covid-19 vaccine nearing completion.

The vaccine, being developed by global pharmaceutical company Pfizer and BioNTech, is said to be 90% effective against the coronavirus. A successful rolling out of the vaccine would enable economies to stabilise and relieve pressure on industries forced to shut down as a result of the pandemic.

Oil prices

Following significant drops in the oil price near the end of October –  as low as $38 a barrel – international prices have again climbed above $40 a barrel, settling near $43.

Reflecting much of the market, international oil prices were invigorated by the news of a possible Covid-19 vaccine, and the hope of a return to ‘normal’ for industries. However, uncertainty remains over how quickly and affordably such a vaccine could be rolled out.

Oil prices have also been supported by a weaker dollar on the back of the US presidential elections. However, the removal of election tension may open the market up to trouble further down the line, with a Biden presidency looking more to renewable energy, to the likely detriment of fossil fuels.

Analysts say that these stated plans are ambitious, and are likely to be watered down – especially if US republicans continue to hold the senate, which would result in policy stalls. The risk to oil assets in this regard are viewed over a longer term.

Expected changes

This is how the changes could be reflected at the pumps:

Fuel (Inland) November Official December Expected
95 Petrol R14.59 R14.23
93 Petrol R14.39 R14.05
0.05% Diesel (wholesale) R12.25 R12.20
0.005% Diesel (wholesale) R12.27 R12.23
Illuminating Paraffin R6.55 R6.65

Read: Here is the official petrol price for November

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Here is the expected petrol price for December