R1.00 per litre petrol price joy lined up for next week
The last few days of June are showing a strong over-recovery in fuel prices of around R1.00 per litre, meaning a price cut is all but guaranteed for July.
According to the latest data from the Central Energy Fund (CEF), petrol prices are showing an over-recovery of between R1.01 and R1.07 per litre for petrol and a smaller 27-33 cents per litre for diesel.
This comes as the over-recovery has been sustained for most of the month.
The stronger showing for local pricing is due to a stronger rand in June, which has almost completely reversed its contribution to an under-recovery in prices.
The rand/dollar exchange rate is largely flat, contributing only 1 cent per litre to an under-recovery.
Global oil prices are the biggest factor to thank for lower pricing coming next week, covering the bulk of the over-recovery.
Oil prices lifted in June when compared to May, eating away at some of the positive contributions to lower local fuel prices.
However, prices have come down steadily year-to-date, and have held steady in the last week.
According to Bloomberg analysis, oil was steady near its highest close in eight weeks amid simmering geopolitical tensions from Yemen to Russia, trading around $86 a barrel.
Prices have been at their strongest levels since late April.
This is due to Houthi militants ramping up attacks on ships off Yemen recently, while other geopolitical tensions—like Russia blaming the US for a missile strike on occupied Crimea and warning of “consequences.”
Bloomberg said that in addition to the higher prices, markets are anticipating a tighter supply in the months ahead, warning that global markets are set for a supply deficit in the coming quarter.
However, these factors are unlikely to impact the immediate-term over-recovery in South Africa, as the end of the month approaches.
The rand could swing the final price by a few cents either way, given the inherent volatility in the local markets as they await president Cyril Ramaphosa’s announcement of a new cabinet.
Investors and analysts have been left waiting as wrangling and negotiations among the Government of National Unity partners take place, with some widely reported disagreements and sticking areas.
However, sentiment is quite bullish that the outcome of the talks will result in a fairly business-friendly and pro-reform government, which should unlock economic opportunities and growth.
The Department of Mineral Resources and Energy will publish the official fuel price adjustments for July in the coming week, before they come into effect on Wednesday, 3 July 2024.
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