Oil’s recent price advances slowed in the first half of July, putting a ceiling on potential fuel price increases as the Rand traded mostly flat against the US dollar. This is according to the Automobile Association (AA), which was commenting on unaudited mid-month fuel price data released by the Central Energy Fund.
The current data points to fuel price rises at month end of around 35 cents a litre for petrol, 68 cents for diesel, and 63 cents for illuminating paraffin.
“This will still leave our fuel prices below their pre-lockdown highs notwithstanding the Rand currently being pegged about two Rand weaker to the dollar than it was then. Despite our cautious optimism that stability is creeping back into the market, we still advise motorists to expect further fuel price rises in the short term,” the AA says.
The Association notes that oil climbed slightly in the first few days of July, accounting for the bulk of this month’s increase to date.
“In the past ten days, though, oil has been priced in a narrower band, and we believe this might represent a more stable price plateau as the world oil market continues to rebound from the dramatic price plunges of April,” says the AA.
The Association notes that the Rand too has been unusually stable over the past month.
“Since 19 June, the local currency has traded in a daily band between R16.40 and its current level of around R16.80 to the dollar, which is a narrow range by comparison to what we have seen since March. It seems that there was some Rand over-reaction to much of the bad news – both globally and domestically – over the past three months. We’re hopeful the correction will continue towards more optimistic valuation levels,” the AA concludes.