Picture: SOWETAN
Picture: SOWETAN

Rand resilience and a declining oil price have set the scene for a further fuel price drop.

This is according to the Automobile Association (AA)‚ commenting on unaudited mid-month data released by the Central Energy Fund (CEF).

The current picture suggests road users could be looking at a petrol price decline of between 60c and 64c a litre at month-end‚ with diesel showing a 60c reduction and illuminating paraffin 57c‚ the organisation said on Tuesday.

"The rand remained mostly stable against the US dollar in the first half of June‚ with strength in the currency contributing three cents a litre to the drop.

"The big move was from oil‚ which shrugged off Opec’s production quotas to drop by about 8% since the start of the month."

The association cautioned‚ however‚ that the fuel price would come under pressure if the three major ratings agencies downgrade rand-denominated debt to junk status in future reviews of SA’s sovereign credit ratings.

"That could trigger substantial capital outflow‚ almost certainly leading to rand weakness which will be heavily negative for the fuel price‚" the AA said.

"Barring unexpected political or economic shocks in the lead-up to the next ratings reviews‚ we expect fuel price movements to mainly depend on international petroleum prices."

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