Possible fuel price drop just in time for holiday season
A fuel price relief could be on the cards for South Africans after international petroleum prices came down from their late-October highs.
POLOKWANE – This is the view of the Automobile Association (AA), which commented on the unaudited mid-month fuel price data released by the Central Energy Fund (CEF).
Per the AA, international oil prices remained stable throughout October, but have been in decline since the start of November.
The Rand/US dollar exchange rate strengthened over the same period, making a welcome contribution to the picture. Current data suggests a reduction in the petrol price of 45 cents a litre, with diesel down by 38 cents and illuminating paraffin enjoying a 40-cent reduction.
However, the AA warned that the Rand had weakened sharply against the dollar in the wake of the US election results, and said if the local currency did not return to its previous levels, the fuel price picture could be quite different at month-end.
In addition to short-term fluctuations, the AA believes the Rand remains exposed to a possible ratings downgrade in South Africa.
The currency is now also vulnerable to possible shifts in US policy when president-elect, Donald Trump, takes office early in 2017, the Association added.
While the expected reduction at the pumps ahead of the 2016 holiday season is welcome, South Africans would be wise not to expect sustained drops in the fuel price over the next few months, the AA added in conclusion.
