What to expect from petrol prices in South Africa this Wednesday

South African motorists are set to enjoy reduced petrol prices this week, according to the month-end data from the Central Energy Fund (CEF).

The data shows an over-recovery for petrol and diesel, and a cut at the pump prices on Wednesday, 3 September.

Projections for this cut are as follows:

• Petrol 93: decrease of 12 cents per litre
• Petrol 95: decrease of 4 cents per litre
• Diesel 0.05% (wholesale): decrease of 55 cents per litre
• Diesel 0.005% (wholesale): decrease of 55 cents per litre
• Illuminating paraffin: decrease of 37 cents per litre

Favourable conditions with the rand and oil prices are a key factor in this over-recovery.

While the cut for petrol prices is relatively minor, it does indicate a reversal of the flatter start to recoveries at the start of last month.

The rand again played a role in this as it went from contributing to an under-recovery to contributing to an over-recovery as it strengthened against the US dollar throughout the month.

This culminated in the rand trading mostly sideways during the final week of the month, holding in the R17.60 to R17.70/$ range.

Notably, local factors, such as hotter consumer inflation and higher producer inflation, as well as local news cycles, had seemingly little impact on the rand.

The rand has also proven to be strangely resilient in the face of extraordinary economic events like the implementation of a 30% tariff on South African exports to the United States.

That said, the currency remains undervalued and at risk from the effects of weak growth, poor economic policies and perennial infrastructure, power and logistics crises, adding about R4.00/$ to the exchange.

Good news for diesel

The August recovery for diesel has been more pronounced than for petrol, thanks to relatively flat oil prices.

According to Bloomberg’s analysis of the market, oil prices are edging lower and are on course for a monthly loss.

This drop is the first since April, when most commodities were hurt by a sharp escalation in Trump’s trade war and concerns that energy consumption would suffer.

For August, oil traded below $68 a barrel, with the global benchmark about 5% lower for the month.

Currently, global oil supplies are still low amid higher seasonal demand, which has helped rebalance the local diesel prices.

The Department of Petroleum and Mineral Resources will release the official fuel price changes sometime before Wednesday.