Steady declines in international oil prices have got the upper hand over a weakening rand, setting the stage for fuel price reductions at month-end.
This is according to the Automobile Association (AA), which was commenting on unaudited mid-month fuel price data released by the Central Energy Fund.
“Petrol is currently showing a drop of between 14c and 25c a litre, diesel around 55c, and illuminating paraffin 60c,” said the AA.
It said oil’s pullback since the start of the month has been quite marked.
“In the case of illuminating paraffin, the landed price of the fuel dropped by more than 90c in two weeks. Similar positive effects have been noted on the other main liquid fuels.”
However, the rand has weakened substantially over the same period, with the moving average against the US dollar slipping from just over R14.30 to R14.85.
“This reflects underlying weak economic sentiment in South Africa, and we share the view of many commentators that further weakening is likely,” the AA said.
Fortunately, the rand’s poor showing was not enough to take the shine off the reduction in the landed prices of fuel.
The AA said the trends from now to month-end would determine whether fuel prices could cling on to these gains. “If the rand continues to slip, we might see some reversal of the trend.”
BY: MOTORING REPORTER AND AASA
SOURCE: TMG DIGITAL