According to fresh data from the Central Energy Fund published last week, it seems as though there will be fuel price reductions across all grades of fuel from August contradicting earlier projections of a diesel increase.
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The latest predictions from the CEF indicate a slight diminishment in the petrol price decrease, but this comes with a reduction in the anticipated diesel price hike. Should these predictions hold until the first Wednesday of August (next week), when the Department of Mineral Resources and Energy adjusts the country’s fuel prices, motorists can expect some continued relief at the pumps. The stability of global oil prices and the Rand/Dollar exchange rate will be crucial for these positive predictions to materialize. The price of oil trending downwards and a stronger Rand would be advantageous, as these are key factors influencing South Africa’s fuel costs.
Related: July Fuel Price Decrease – Coastal and Inland Prices
Although the anticipated cuts are modest compared to the significant petrol price reductions of the past two months, any relief is welcome. The expected cuts are precariously balanced, and any significant weakening of the Rand or a sharp rise in oil prices could reverse the trend. However, as July concludes, the chances of this happening decrease.
On the positive side, the Rand strengthened to R18.26 to the Dollar on 26 July, compared to R18.34 earlier in the month. Additionally, oil prices have cooled to just over $82 a barrel, down from the $85 a barrel range seen for most of the month. Despite these positive developments, the Rand remains weaker overall compared to sub-R18 levels seen a few weeks ago, partly due to expected interest rate cuts in both South Africa and the US. Investec chief economist Annabel Bishop noted that markets have fully factored in an interest rate cut for September, which impacts the comparative return on Rand deposits and similar hard currency assets.
Official figures should be announced next week.
