Business Headlines

PETROL PRICE CLIMB WHILE DIESEL FINDS REPRIEVE

Sithembile Bopela

Koketso Mano,

 Motorists will have to brace for another petrol price increase in May as prices track higher for a fourth consecutive month this year, while diesel will see a cut. The price of diesel decreased by R0.30/litre, while both 93 and 95 octane petroleum prices increased by R0.37/litre. This means that the average logistics vehicle with an 80-litre diesel tank will cost around R24 less to fill up, while 93 and 95 octane petrol tanks will cost an additional R29.60. Similarly, the average consumer vehicle with a 45-litre diesel tank will cost around R13.50 less to fill up, whereas filling 93 and 95 octane petrol tanks will cost an additional R16.65.

While a mixed bag of global developments— including easing geopolitical tensions in the Middle East— helped ease oil prices from year-to-date highs during the month, the price of Brent crude remains elevated from its starting position of $75 a barrel at the beginning of the year. However, global economic growth constraints, hawkish sentiments from the US Federal Reserve— coupled with a large crude inventory build in the region, served to cap further upside to oil prices, amid subsequent demand concerns and dollar strength.

In the same breath, the local currency traded weaker for most of the month, driven primarily by international developments. With limited local catalysts to drive sentiment, investors grappled with the prospects of a higher-for-longer interest rate stance by the US Fed with similar remarks echoed by the SARB, while caution prevails ahead of the much-anticipated national elections in May.

Fuel price under-recovery for April

Diesel prices eased back amid seasonal changes and reduced demand leading to an over-recovery of the basic fuel price. On the other hand, petrol prices have steadily increased amid higher demand during the driving season in the northern hemisphere, propping up average international prices and leading to an under-recovery of the basic fuel price for this month.

An over-recovery usually happens when consumers are paying more than they should for the product on that day, while an under-recovery means the opposite. The daily over or under-recovery values are accumulated over the month and the final excess or shortage amount is then incorporated into the pump price on the first Wednesday of the next month. The CEF releases a daily report on the over-recovery and under-recovery of the basic fuel price.

 Sithembile Bopela,is  Investment Analyst, FNB Wealth and Investments and Koketso Mano, FNB Senior Economist.

INFO SUPPLIED.

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