Commenting on unaudited month-end fuel data released earlier this month, the Automobile Association said that despite higher international oil prices over December, all grades of fuel are set to fall at the next fuel price adjustment.
The decrease of 34c/l for 95 octane petrol, came into effect on 3 January 2018, which took the per litre price to R14,42 inland, while the coastal price dropped back below the R14,00 mark, to R13,93.
The department also announced a decrease of 29c/l for 93 octane petrol, while the per litre price of diesel with 0.05% and 0.005% sulphur content will decrease by 22c and 26c respectively.
First fuel price decline after five consecutive petrol price increases
The strength of the rand has caught many economists by surprise, according to James Paynter, founder of Dynamic Outcomes and a financial market analyst.
“If one looks at the weak fundamentals, the rand should actually have been weakening, but it has done the opposite. This is because markets do not move based on fundamentals or rational thinking, but by mass human sentiment,” said Paynter.
The wholesale price of illuminating paraffin will decrease by 29c per litre, while the cost of wholesale LP Gas will decrease by 71c per kg.
The department said the main reasons for the fuel price adjustments were due to a stronger rand against the US dollar, which went from R14.10 to R13.27, on average, during the period under review.
The strengthening rand was however undermined slightly by an increase in the average Brent Crude oil price, which increased from $62.50 to $63.77 per barrel during the period under review.
Brent crude closed at its highest in more than two years due to the shrinking US stockpile, while a key North Sea oil pipeline remains shut, although the repair of the pipeline is now complete and pressure testing is well under way.
Source: AA; News24