AA expects tiny drop in petrol price for June
After several weeks of stability, international oil prices have started to climb again, the AA says
The Automobile Association (AA) is forecasting a slight decline of about 1c/l for petrol in June, while diesel is set for a 20c/l increase, with illuminating paraffin indicating a rise of 25c.
The AA was commenting on unaudited mid-month fuel price data released by the Central Energy Fund.
"After several weeks of stability, international oil prices have started to climb again, with a slight peak in the first week of May before a modest pullback," the AA said.
"Although there is still a rebalancing of global supply and demand taking place in oil markets, the current variations are starting to more closely resemble the picture we saw before the Covid-19 pandemic. This suggests that normal market forces are increasingly gaining the upper hand over 2020’s disruptive gluts, which led to astonishing sub-zero prices for West Texas Intermediate (WTI) oil."
After a series of fuel price hikes in recent months, motorists experienced some relief in May when petrol grades (93 and 95) decreased 9c/l , with the wholesale price of diesel dropped 30c/l for low-sulphur 50ppm and 31c/l for high-sulphur 500ppm.
The AA said the rand’s surprising strength was helping to offset the oil price gains.
"Although the daily exchange rate has been wildly variable, the average rate has seen the local currency gain around 20c against the US dollar since the start of May. This means a nett gain of around 11c against the dollar,” the association said.
It further noted that while the mid-month picture indicated certain movements now, those were likely to change before the official adjusted price for June was announced by the department of mineral resources and energy later in May.
"The oil-versus-rand see-saw will likely continue through the rest of May, and the month-end picture may be somewhat different to what’s currently being seen," the AA said.
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