Following yet another surge in fuel prices at the start of the month, the latest data from the Central Energy Fund (CEF) predicts that a swing in fortunes is in play for diesel prices in South Africa, stirring hope for the coming month.
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According to the CEF, diesel prices have moved from a sizeable under-recovery of around 65 cents per litre at the start of the month to a flatter rate, ranging from -0.5 centre per litre to an over-recovery of 1 cent per litre.
While a better indication of the overall direction for prices can be gauged close to the middle of the month, BusinessTech reports that this shows a positive swing.
According to the publication, a flat or even positive move for diesel prices will be some welcome relief to the diesel-using industry in South Africa – particularly those in the logistics and agricultural sector, who have had to contend with significantly higher prices in 2024, following a price hike of R1.80 per litre in January and February.
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Additionally, CEF’s data indicates that a similar swing – however, to a lesser extent – can be seen in the recoveries for petrol prices.
While still in an under-recovery of around 35 cents per litre, it nevertheless brings a slight sense of relief from the R1 per litre at the start of the month.
The main driver behind the stronger recovery in fuel prices, according to BusinessTech is a much more supportive rand/dollar exchange rate, with the local unit sticking well below the R19/$ mark at around R18.70.
The publication adds that the lower global oil price has also made a marked difference, though it remains range-bound and is still contributing to an under-recovery in prices.
According to Investec chief economist Annabel Bishop, oil markets are showing volatility due to demand patterns, supply issues and disruptions in the Middle East.
For hope to persist, as per the publication, motorists will have to bank on the rand remaining in its relatively stronger positioning and for global oil prices to stabilise or even come down.
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