Here is the expected petrol price for August

Mid-month data from the Central Energy Fund points to flat fuel prices in August, with a negligible cut on the cards for petrol and a small hike for diesel.

The data from the CEF shows that petrol prices are slated for a small cut of around 8 cents per litre, while diesel prices are on track for a price hike of between 1 to 15 cents per litre.

This is a reversal of the downward trend seen over the past few months, with prices appearing to stabilise based on global conditions.

However, the alleged attempted assassination of former US president Donald Trump at the weekend has also caused a shift in markets, which is not yet reflected in the latest data.

Early trade on Monday in South Africa reflected similar conditions to last week’s close—but the uncertainty the event has added into the mix means that global market conditions could shift before the end of the month.

These are the expected changes:

• Petrol 93: decrease of 5 cents per litre
• Petrol 95: decrease of 8 cents per litre
• Diesel 0.05% (wholesale): increase of 1 cents per litre
• Diesel 0.005% (wholesale): increase of 15 cents per litre
• Illuminating paraffin: increase of 8 cents per litre

The CEF does not present daily snapshot data for LP Gas.

The Department of Mineral Resources and Energy (DMRE) has noted that its daily snapshots are not predictive and do not encompass other possible modifications, such as slate levy adjustments or retail margin changes.

The department determines these adjustments, considering various factors, at the end of the month.

Domestic fuel costs are primarily governed by the rand/dollar exchange rate and international oil prices. In South Africa, the fuel price is adjusted on the first Wednesday of every month based on these two factors.

For August, fuel prices have ticked higher relative to July, while the rand has strengthened, delivering a buffer.

Oil prices

The main culprit behind the pressure on fuel prices is the global oil price.

Oil prices have remained solidly higher for the year so far—helped by oil-producing nations (OPEC+) curbing supply and stronger fuel demand over the Northern Hemisphere summer.

However, the supply constraints have also been kept partially in check by China—the world’s biggest oil importer—cutting demand.

China’s appetite for raw materials, including crude, has shrunk over the first six months of the year, Bloomberg analysis showed.

Following the reported assassination attempt on Trump, a rally in the dollar has also put downward pressure on oil, which means that pricing could also ease.

Local analysis, including from Nedbank, points to oil prices being largely range-bound for the remainder of the year, which should result in flatter price forecasts.

However, this does not account for any market shocks (such as the Trump assassination attempt), which could swing things.

Movements in oil (thus global petroleum products) are currently contributing between 9 to 33 cents per litre to an under-recovery in local pricing.

Rand/dollar

Given the sharp increase in the under-recovery due to the oil price, motorists can at least thank the relative strength in the rand over the past few weeks for undercutting its impact.

The rand managed to push under R18.00 in the first half of July, with local markets boosted by more certainty in governance through the Government of National Unity (GNU) as well as positive statements pointing to the start of global and local interest rate cuts.

Sentiment from the US Fed has shifted, with markets pricing in the start of the US rate-cutting cycle in September 2024. Previously, sentiment was more negative, with a November 2024 start pencilled in.

This has pushed local projections to also pull back from more pessimistic stances on the cutting cycle—though the general expectation still remains with November 2024 being the most likely start date.

Economists at Nedbank have long held that September 2024 would be the first interest rate cut for South Africa, but other views have been that cutting ahead of or at the same time as the US Fed would be unlikely.

Regardless of the exact meeting, there is more confidence in the market that South Africa will see rate cuts in 2024, rather than pushed back to 2025.

Once again, however, the assassination attempt at the weekend has thrown a spanner in the works for the new week, with the event leading to some uncertainty in the US.

According to Bianca Botes, Director at Citadel Global, the attempted hit caused the dollar to gain against its peers, as bets have risen that Trump will now win a second term as US president.

In early trade on Monday, the rand pushed back over R18.00 to the dollar.

This is how the price changes will reflect at the pumps (Diesel prices reflect wholesale, pump prices will differ):

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