The first week of November has been a turbulent period for global markets, pushing South African fuel price recoveries into negative territory before seeing a slight recovery toward the end of the week, Cape {town} Etc reports.
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According to the latest data from the Central Energy Fund for 7 November, there has been a minor improvement in fuel price recoveries compared to the beginning of the month. Although the rand’s volatility, particularly in the lead-up to and immediately after the US presidential election, kept upward pressure on fuel prices—resulting in an under-recovery of up to 16 cents per litre—markets have begun to stabilise. Notably, 93 octane petrol is now showing a small over-recovery, marking a positive shift.
Fuel price recoveries for 93 octane petrol have flipped from a near 10-cent-per-litre under-recovery at the start of November to a 5-cent-per-litre over-recovery. While these changes are relatively small, they highlight the significant impact that fluctuations in global oil prices and the rand’s strength can have on local fuel pricing.
The recovery is not limited to petrol prices; all fuel types have seen a small but positive shift, with under-recovery amounts reducing by around 12 cents per litre. This improvement can be attributed to a stronger rand, which has rebounded after losing value against the US dollar following the election of Donald Trump as president.
The initial post-election period saw a negative market reaction, with concerns about the impact of Trump’s policies on emerging markets. However, attention quickly turned to the US Federal Reserve’s decision to lower interest rates by 25 basis points. The Fed has indicated that the pace of its rate cuts may be slower than initially anticipated, which has led to a weaker dollar and helped strengthen the rand.
Nedbank economists noted that the revision of market expectations for US interest rate cuts in 2025 has affected emerging market currencies broadly, although this is not expected to significantly impact South Africa’s own interest rate policy in the short term. Future rate hikes remain a possibility, depending on how global economic conditions evolve.
As for oil prices, they have remained relatively stable in recent weeks, though market conditions could shift quickly. According to Joseph Dahrieh, Managing Principal at Tickmill, several factors are influencing the oil market. The waning threat from Hurricane Rafael, which had disrupted US crude production, and the potential for new US sanctions on countries like Iran and Venezuela, are key variables that could limit oil supply. On the demand side, a notable drop in Chinese crude imports—down 9% in October, marking the sixth consecutive month of declines—has raised concerns about slowing global consumption. Additionally, an increase in US crude inventories has put further downward pressure on oil prices, creating a climate of uncertainty.
Despite these concerns, Nedbank economists pointed out that oil prices have edged up slightly during the week, partly due to expectations that OPEC will maintain its output restrictions into 2025. However, given the volatility in both oil and currency markets, the outlook remains highly fluid.
One ongoing concern is the significant under-recovery in diesel prices, which stands at around 50 cents per litre. This will require a substantial shift in global oil prices to bring the market back into balance.
A clearer picture of fuel price trends for the month and potential adjustments for December will become evident with the release of mid-month data next week. However, with market conditions remaining volatile, pricing uncertainty is expected to continue in the near term.
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