The latest calculations by the Central Energy Fund show that – at the current levels of the rand-dollar exchange rate and oil prices – diesel and fuel prices may be cut in September.

Currently, 95 unleaded petrol looks set for a cut of 11c a litre, while 93 petrol may be lowered by almost 15c and diesel looks due for a 24c decline. Paraffin may be lowered by almost 16c.

There is still some time for September fuel prices to change, as the oil price and rand fluctuate. Fuel prices are adjusted by the Department of Mineral Resources and Energy on the first Wednesday of every month.

The fuel prices are determined by the oil price – as well as the dollar-rand value, as South Africa buys oil in dollar.

After spiking to the highest levels in years, oil prices cooled in August amid concerns that the US central bank may start to taper its support to the markets.

In a bid to soften the pandemic’s economic blow, the Fed cut interest rates and bought billions in US bonds since March last year. This meant that there was a lot of capital in the market for many months, pushing prices higher.

If the support fell away, and interest rates were hiked, this may cool economic growth, impacting the demand for oil.

Weak data out of China also pressured the oil price in August.

Brent crude oil fell almost 7% in August.

This more than offset a 2% decline in the rand against the dollar. The US currency got a boost from the central bank’s indication that interest rates may be hiked sooner rather than later. Higher interest rates make holding the dollar more appealing compared to other currencies.

The dollar and oil prices could still see big moves in coming days, following the highly anticipated Jackson Hole symposium from the Fed on Friday. Fed chair Jerome Powell will give his views on the US economy and the central bank’s support measures.

At the start of August, the petrol price was hiked by 91c a litre, while diesel prices were increased by more than 55c.

SOURCE:

Petrol and diesel prices set for a cut next month | Fin24 (news24.com)

Fuel gauge.