Expected Petrol Prices for June 2024

Date: May 16, 2024 | Posted in News | South African News

South African motorists can look forward to some relief at the pumps next month, with mid-month data from the Central Energy Fund (CEF) indicating price reductions across all fuel types.

Current projections show petrol prices experiencing an over-recovery of about 62 cents per litre, while diesel prices could see even larger cuts, ranging from 74 to 77 cents per litre.

Here are the anticipated changes:

Petrol 93: decrease of 63 cents per litre
Petrol 95: decrease of 61 cents per litre
Diesel 0.05% (wholesale): decrease of 74 cents per litre
Diesel 0.005% (wholesale): decrease of 77 cents per litre
Illuminating paraffin: decrease of 69 cents per litre

The CEF does not provide daily snapshot data for LP Gas.

The Department of Mineral Resources and Energy (DMRE) has emphasized that daily snapshots are not predictive and do not account for other potential adjustments, such as slate levy changes or retail margin modifications.

These adjustments are determined by the department at the end of the month, considering various factors.

Domestic fuel prices in South Africa are primarily influenced by the rand/dollar exchange rate and international oil prices. Fuel prices are adjusted on the first Wednesday of each month based on these factors.

For June, both oil prices and the rand/dollar exchange rate are favoring motorists, contributing to the current over-recoveries.

Rand

The rand has shown relative strength in May, as concerns about the upcoming 2024 elections have eased and markets are anticipating a more business-friendly outcome.

Previously, the local currency was under pressure as investors were anxious about the ANC potentially losing its majority and having to form coalitions with anti-business parties like the EFF or the unpredictable MK Party led by Jacob Zuma. However, these fears have subsided with projections suggesting stability post-election.

The global tone on interest rate cuts, particularly from the US Federal Reserve, is another major factor affecting the rand. Although the first US rate cut is expected in November, market sentiment fluctuates based on signals from the Fed.

Investec chief economist Annabel Bishop predicts that the rand will remain volatile but could strengthen with an earlier US rate cut and around 45% ANC voter support, with no ANC/EFF coalitions.

Today’s crucial US CPI data might cause some volatility, providing fresh momentum to traders. A hotter-than-expected reading could put the rand under pressure.

Citadel Global director Bianca Botes stated that US data, especially CPI and retail sales, will guide the Fed’s tone. A higher-than-expected CPI reading would likely pressure the rand.

Oil

Oil prices have slightly increased this week, nearing $83 a barrel after dipping below $82 earlier in the month. Bloomberg reports that the rise follows an industry report indicating shrinking US stockpiles and anticipations of the International Energy Agency’s market balance report for the second half of the year.

Prices have also risen due to OPEC+ curtailing output to prevent a glut and support global prices, alongside ongoing geopolitical tensions in the Middle East and Russia.

Despite these factors, oil prices remain relatively stable, well below the $90+ per barrel seen earlier in the year, with predictions of reaching $100 per barrel.