Fuel price decreases will bring cheer for motorists

The AA says motorists can look forward to fuel price reductions at month-end, with petrol expected to drop between 26c and 36c a litre, and diesel down by a whopping 88c.

This follows a 1c a litre increase for all grades of petrol and a 21c decrease for diesel at the beginning of September.

Illuminating paraffin could show a healthy 83c drop, said the AA when commenting on unaudited mid-month fuel price data released by the Central Energy Fund.

"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. Since the start of September, the Rand has traded in a commendably tight range by recent standards," said the AA.

While the Rand was advancing, international oil prices were beating a retreat, with the landed price of refined fuels in SA slipping by more than 10% since September 1.

"This all adds up to a promising picture for fuel users," the association said.

However, the AA cautioned that oil prices would likely continue to see-saw as world oil demand and supply gradually rebalance following the turbulence of the initial lockdown period of March to June.

The AA said it is usual at this time of year for the impending northern hemisphere winter to start driving demand for heating fuels, meaning pressure on refining capacity for fuel oils, including diesel.

"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. A period of further oil price and Rand stability would give a much-needed breather to SA fuel users," the association said.

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