Oil prices are elevated as traders look ahead to a slew of market data that’ll shed light on supply-demand trends after OPEC+ cut production. Picture: Henk Kruger, African News Agency
MAY THE force be with motorists come next month as early data is pointing to yet another petrol price increase.
This comes as the Central Energy Fund released its snapshot of fuel prices on April 10, which showed diesel users could possibly be in store for another price cut while petrol users will be forced to fork out more cash.
The data revealed that petrol prices could rise between 63 cents and 70 cents per litre, while diesel could see a decrease between 38 cents and 50 cents per litre.
Fuel prices in South Africa are largely defined by the rand/dollar exchange rate and the price of oil.
The month of April saw a minuscule drop in petrol prices, and a price cut for diesel.
The rand could be set for a tough month as winter rolls in in South Africa, with the newly appointed Minister of Electricity, Kgosientsho Ramokgopa, warned last week of up to Stage 10 load shedding this winter.
On Tuesday, Investec’s Annabel Bishop said that the rand traded weaker in increasingly risk-averse markets, with the domestic currency weakening to R18.62 to the dollar, R20.13 to the euro and R22.94 to the pound on Friday, and only having pulled back modestly so far in thin trade.
Ramokgopa said, “Now we are entering winter, which is going to be a very difficult period. The numbers suggest that historically the average [demand] is about 35,000MW, but it can go up to 37,000MW. On average, Eskom can guarantee us about 27,000MW, and we know that peak demand in summer is about 32,000MW.”
“Higher demand will widen the gap in the electricity shortfall, negatively affecting economic growth and investor demand,” Bishop said.
Frank Blackmore, the lead economist at KPMG, said fuel prices for April remained fairly similar to what they were in March.
Blackmore said, “The real benefit will come through for diesel drivers, while the price changes for petrol, inland and on the coast is not much different. Even though the petrol price did not change much, it will feed into lowering the inflation rate in general but may be short-lived, given the fact that OPEC+ decided to cut their production and we saw an increase in the petrol price globally.”
Bloomberg recently reported that oil prices are elevated as traders look ahead to a slew of market data that’ll shed light on supply-demand trends after OPEC+ cut production.
Oil prices began to increase last week after the OPEC+ region surprised markets by cutting down on production.
Economists and analysts have been fearing the worst for the South African economy as the cost of living crisis spirals out of control.
CEO of Debt Rescue, Neil Roets, told Business Report on the fuel price decreases announced for April, “The announcement by the Department of Mineral Resources and Energy (DMRE) of a marginal drop in the price of 93 Octane petrol is cold comfort for millions of South Africans who face a volley of price increases in April, not least of which the much-protested Eskom price hike of 18.65%, and a shocking repo rate hike of 50 basis points that has seen interest rates climbing to unprecedented levels.”
He further added that while he understood the repercussions of global decisions like the announcement by Opec that they were cutting production of oil by about 1.16 million barrels per day, the resulting cost-of-living increases were decimating people’s lives.
“For the millions of South Africans buckling under the onslaught of monumental cost-of-living increases in April, there is no silver lining. The repo rate hike will increase borrowing costs for consumers and reduce their disposable income even further while pushing levels of debt even higher,” he said.
– BUSINESS REPORT