Here is the expected petrol price for November

Mid-month data from the Central Energy Fund (CEF) points to trouble for petrol and diesel prices in November.

The data from the CEF shows that petrol prices are slated for a hike of between 3 and 14 cents per litre, while diesel prices are also on track for a hike of around 14 cents per litre.

Should current market conditions persist until the end of the month, this would break the recent five-month cutting streak.

However, analysts have pointed out that things could shift in the weeks ahead – for better or worse.

These are the expected changes:

• Petrol 93: increase of 3 cents per litre
• Petrol 95: increase of 14 cents per litre
• Diesel 0.05% (wholesale): increase of 14 cents per litre
• Diesel 0.005% (wholesale): increase of 13 cents per litre
• Illuminating paraffin: increase of 7 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 November’s changes, oil prices so far in October have been quite volatile relative to September, while the rand has generally been stronger against the dollar overall, helping with recoveries.

Oil

The global oil price has been the main driver of local recoveries and has been quite volatile – shooting up on increased risks from the conflict in the Middle East escalating and drawing in more countries and then sinking on the underperformance of China’s economy.

In the most recent session, oil prices once again tracked below $75 a barrel after hitting close to $80 a barrel in the last two weeks.

Oil prices surged higher in October after markets priced in the risk of Israel targeting Iran’s oil supplies following the latter’s missile barrage on 1 October. However, prices fell for a third session after a report that Israel may avoid targeting Iran’s crude infrastructure eased concerns over a major supply disruption.

On top of a ‘scaled-back’ retaliation from Israel, Brent crude also declined 2% this week after China’s highly anticipated Finance Ministry briefing over the weekend lacked specific new incentives to boost consumption in the world’s biggest crude importer.

“Adding to the gloom, OPEC joined a chorus of others projecting weakening demand growth, trimming its forecasts for this year and next for a third consecutive month,” Bloomberg analysts said.

This volatility in the global oil market has been reflected in local fuel recoveries, starting with a massive over-recovery of 80 cents per litre at the start of the month, dipping into a 6 cents per litre under-recovery at the end of last week, and now sitting at a 14 cents per litre under-recovery.

Economists warn that these fluctuations could continue for the rest of the month, given how pricing can change along with global risk sentiment.

Rand

The same is being reflected in the rand/dollar exchange rate.

After pushing toward R17.00 to the dollar and flirting with a break below this crucial resistance level, the local unit moved in the opposite direction and traded much weaker last week.

The rand weakened to around R17.60/$, pressured by the stronger greenback and ongoing uncertainty surrounding China’s economic outlook. The rand’s performance was also influenced by the anticipation of further SARB rate cuts.

While the rand closed stronger at the end of the week, it has not been able to find direction since then.

However, even at around R17.50 to the dollar, the rand is stronger compared to September and is still contributing to an over-recovery in prices of around 15 cents per litre.

A significant weakening towards R18.00 to the dollar would reverse this.

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

Read: Petrol station warning in South Africa