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Here is the expected petrol price for June

───   09:34 Sun, 16 May 2021

Here is the expected petrol price for June | News Article

Mid-month data from the Central Energy Fund points to a marginal petrol price hike in June, while diesel could see a more sizeable increase.

The CEF data shows an under-recovery for both 93 and 95 petrol, with prices expected to rise no more than a few cents per litre. Diesel drivers, meanwhile, can expect an increase for 0.05% and 0.005% at around 19 cents per litre.

Petrol 95: increase of 1 cent per litre;

Petrol 93: increase of 2 cents per litre;

Diesel 0.05%:increase of 18 cents per litre;

Diesel 0.005%: increase of 19 cents per litre;

Illuminating Paraffin: increase of 25 cents per litre.

While the mid-month data serves as a snapshot, the Department of Energy makes adjustments based on a review of the full period. Furthermore, the outlook can change significantly before month-end.

The mid-month prices provide a strong indication of moving trends, however. Prices are affected by two main components – the rand/dollar exchange rate, and changes to international petroleum product costs, largely driven by oil prices.

At mid-May, the stronger ZAR/USD exchange rate is contributing to an over-recovery of around 10 cents per litre – however, changes to international product prices are swallowing up those gains, leading to diverging trends for petrol and diesel.

Product prices for petrol have remained high, but flat, contributing to a 12 cents per litre under-recovery in the price. Prices for diesel and illuminating paraffin are showing a 28 cents and 35 cents per litre under-recovery.

Exchange rate

The rand has rallied in May, even dipping under R14 against the dollar at the start of the week.

The rand’s strength has largely been driven by dollar weakness, rather than any overly positive local news, though the decision by ratings firm, Moody’s, to skip the expected review of South Africa’s sovereign debt served as a boon for skittish investors.

According to Reuters analysis, the rand has been on a strong run since March, prompted by lower rates in the developed world, a surge in global commodity prices, and signs the local economy is on track for a better-than-expected recovery.

“The key drivers were strong global risk appetites, a weaker US dollar, robust commodity prices, better-than-expected domestic fiscal outcomes and encouraging signs that the ruling party started to take action against corruption within its ranks,” Nedbank economists said in a research note at the start of the week.

The group added that risk appetites among international investors are likely to remain healthy throughout 2021, buoyed by the vaccine-led global recovery, the ultra-accommodative monetary policies of the world’s largest economies and increasingly aggressive fiscal stimulus, especially in the US.

While the currency weakened slightly on Wednesday following a jump in consumer prices in the United States – raising fears that the central bank would tighten its monetary policy, cutting off a key source of supply to riskier assets, it recovered on Thursday alongside other emerging market currencies following the surprise inflation increase in the US.

Longer-term forecasts for the rand are also positive, with Bloomberg economists highlighting several factors working in its favour, which could extend its gains.

These include a surplus of dollars in the local banking system thanks the loan received by the International Monetary Fund as part of global Covid relief efforts, as well as an appealing bond market, which is seeing investors return after fleeing over the last year.

International Product Prices

International product prices for both petrol and diesel have stabilised at higher levels over the course of the month. These product prices are largely driven by global oil prices, and movements in the sector.

Oil prices have climbed steadily since the start of the year, but settled into a ‘wait and see’ mode in April. Prices have not since not fluctuated wildly, hovering at $63 (WTI) and $67 (Brent Crude) a barrel seen in mid-April.

These levels are high compared to the $50 dollar mark seen in December 2020, but are down from $70 a barrel peak in March.

The key driver behind the oil price is the global Covid-19 pandemic and the effect it is having on major economies – who are closing and reopening as infection numbers swell and deflate along with lockdown measures in each region.

International oil groups like OPEC and the International Energy Agency say that global oil demand will likely rebound strongly in the second half of the year with more economies reopening and increased travel amid higher vaccination rates.

However, pressure points still exists, particularly in India and South Asia where more virulent variants of the Covid-19 are wreaking havoc among the populace.

“The rising cases in India and some parts of Southeast Asia and Latin America illustrate risks to oil demand, but the general market has great expectations for demand to materialise later this year,” Victor Shum, vice president of energy consulting for IHS Markit, told Bloomberg.


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