The Department of Energy has stressed that the daily snapshots are not predictive and do not cover other potential changes like slate levy adjustments or retail margin changes, which are determined by the department at the end of the month, taking all variables into account.<\/p>\n
The DoE makes adjustments based on a review of the entire period. Furthermore, the outlook can change significantly before month-end. Ultimately, the expected price changes are contingent on current market conditions persisting through the end of the month.<\/p>\n
Local fuel price fluctuations are impacted by two main factors \u2013 the international price of petroleum products, driven mainly by oil prices, and the rand\/dollar exchange rate used to purchase these products.<\/p>\n
In the first half of the month, oil prices have remained high, thus contributing to a significant under-recovery for petrol in particular. Following a big jump in petroleum product prices for diesel, costs have started reducing. Meanwhile, a stronger rand has helped alleviate petrol and diesel stresses.<\/p>\n
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Exchange rate<\/strong><\/p>\n The rand has rebounded in the first two weeks of November, strengthening from over R18.00 to the dollar to holding under R17.50 in recent sessions.<\/p>\n The local unit has been running at the whims of international markets – especially the dollar – for some time, weaker due to the risk-off sentiment emanating from the US Fed’s hawkish position on rates.<\/p>\n Like most global central banks – South Africa included – the Fed has been on a significant hike cycle and has remained firm that it would continue as long as inflation remains high. However, it did indicate that rate hikes might slow down.<\/p>\n This, alongside a rally in Chinese markets and investors processing US jobs data, has given emerging markets a break, with a more risk-on sentiment boosting those currencies, including the rand.<\/p>\n Locally, however, continued load shedding and expected rate hikes at the end of the month keep the pressure on the rand. Economists expect the unit to continue trading at current levels or to strengthen further before the end of the year – which should help with local fuel prices.<\/p>\n Oil price<\/strong><\/p>\n Oil prices have been volatile in November so far. While spot prices have kept under $100 a barrel, market sentiment has swung from positive to negative and back depending on whatever news gains prominence on any given day.<\/p>\n Factors favouring a higher oil price include supply constraints and rising demand, as Europe seeks fuel sources amid ongoing sanctions against Russian oil heading into winter, and the US reels from OPEC+ and Saudi Arabia’s intention to cut millions of barrels.<\/p>\n However, China’s position on fighting the ongoing Covid-19 spread within its borders favours a lower oil price. As one of the world’s biggest producers, having the Chinese economy dull due to “Covid-zero” restrictions means significant demand from industry is removed from the global demand equation.<\/p>\n According to economists at Bloomberg, this week at least, oil is holding losses as concerns over the near-term demand outlook overshadowed signs of tightening supply heading into winter.<\/p>\n “Weak China data will only serve to reinforce the view that the country\u2019s oil demand will remain in the doldrums as long as its strict Covid control policies remain in place,” said Vandana Hari, founder of Vanda Insights in Singapore.<\/p>\n While crude has lost about a third of its value since early June as a deepening economic slowdown weighed on demand, the OPEC+ output trimming and Russian sanctions still cloud the outlook.<\/p>\n “Time spreads are signalling near-term tightness,” Bloomberg said.<\/p>\n![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2022\/11\/Exchange-rates-mid-Nov-22.jpg\")
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