Fuel price outlook mixed as oil spikes
Fuel price data shows a mixed fuel price outlook for the end of November, with rand appreciation being countered by a sharp spike in international oil prices. This is according to the Automobile Association (AA) which was commenting on unaudited mid-month fuel price data released by the Central Energy Fund.
“It is quite unusual to have such a spread of price outlooks as is currently the case,” the AA says.
It notes, “Petrol is set to drop by up to 36 cents a litre, but by contrast, diesel will likely only see a four-cent drop. Meanwhile, illuminating paraffin is showing an increase of almost ten cents a litre.”
The association says the recent spike in the international prices of refined fuels ends a month-long price decline. The international price of diesel shot up by nearly 20% between November 2 and November 11 before pulling back slightly, while petrol was up more than 15%.
“Fortunately, the rand has fended off most of these increases, and has appreciated strongly against the US dollar, dipping below R15.50 to the dollar on November 10.”
The association said the currency and oil price fluctuations were attributable to world consumption rebounding faster than production, and what it called the “background noise” around the US election of Joe Biden as president. It also said that optimism in the wake of the announcement of a Covid-19 vaccine was being countered by jitters over renewed lockdowns in Europe and the rapid spread of Covid-19 in the US.
“Under the circumstances, oil prices and the rand/USD exchange rate remain as stable as can be expected.”
The AA said the huge drops – and equally large rebounds – in fuel prices over the past six months seemed to have worked themselves out of the system, but warned that nothing could be taken for granted.
“With the South African economy in its current fragile state, fuel users will be among the first to feel any economic shocks.”
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