The Automobile Association (AA) believes that fuel prices will decrease substantially at the end of this month.
The AA was commenting on unaudited mid-month fuel price data released by the Central Energy Fund.
It believes that these price decreases are caused in part by the strengthening of the rand.
“The Rand has put on a remarkable rally against the US dollar in recent weeks, with the daily exchange rate strengthening from R17.30 on August 21 to R16.70 on August 31 and since the start of September, the Rand has traded in a commendably tight range by recent standards,” said the AA.
It noted that while the rand was strengthening, international oil prices were also falling, with the landed price of refined fuels in South Africa slipping by more than 10% since 1 September.
“This all adds up to a promising picture for fuel users,” said the AA.
It expects fuel prices to drop as follows:
- Petrol – 26 to 36 cents per litre decrease
- Diesel – 88 cents per litre decrease
- Illuminating paraffin- 83 cents per litre decrease
Despite this good news, the AA was quick to note that oil prices are likely to continue fluctuating as the world’s oil demand and supply rebalance due to the effects of the COVID-19 lockdown.
It also noted that it is usual at this time of year for the demand for heating fuels such as diesel to increase due to the Northern Hemisphere entering winter.
“However, the seismic shock that COVID-19 has dealt to the world’s economy, along with high stock levels, might mean the increased winter demand for heating fuels may not be enough to translate into substantial diesel price increases,” said the AA.
“A period of further oil price and Rand stability would give a much-needed breather to South African fuel users.”