Author: Staff Writer
15 March 2021
Here is the expected petrol price for April
Mid-month data from the Central Energy Fund points to a big hike in fuel prices in April, following sizeable increases in the first three months of 2021.
The CEF data shows an under-recovery across the board, with prices expected to rise around 90 cents per litre for petrol, and 66 cents per litre for diesel.
- Petrol 95: increase of 90 cents per litre;
- Petrol 93: increase of 87 cents per litre;
- Diesel 0.05%: increase of 66 cents per litre;
- Diesel 0.005%: increase of 65 cents per litre;
- Illuminating Paraffin: increase of 62 cents per litre.
While the mid-month data serves as a snapshot, the Department of Energy makes adjustments based on a review of the full period. Furthermore, the outlook can change significantly before month-end.
The mid-month prices provide a strong indication of moving trends, however. Prices are affected by two main components – the rand/dollar exchange rate, and changes to international petroleum product costs, largely driven by oil prices.
Tax increases will also come into effect in April.
At mid-March, the ZAR/USD exchange rate is contributing to an under-recovery of around 16 cents per litre – however, rising international product prices are contributing to an under-recovery of around 73 and 48 cents per litre to the under-recovery for petrol and diesel, respectively, causing the deficit.
The rand has enjoyed relative stability in the first two weeks of March, mainly being driven by global movements in the market, largely centred around the United States stimulus response to the Covid-19 pandemic.
On average, however, the rand/dollar exchange rate has trended slightly higher than in February, within a narrow range of around R15.00 to the dollar.
While the rand is being supported by high commodity prices, economists note that interest rates in the US are having a much bigger impact on local markets.
Specifically, a rise in rates in the US has pushed investor sentiment out of risk markets like South Africa, resulting in outflows, and putting pressure on the local currency.
This pressure is expected to be sustained for the second quarter of the year, while commodities could fall out of favour, which would put the rand under additional pressure.
The rand has been unmoved by the 2021 budget speech, with analysts noting that much of the economic turmoil and budget tightening has been priced into the currency for a while – however, the extension of load shedding, and student protests threatening to disrupt business operations, have been flagged as short-term concerns.
International product prices
The price of international products used in the refinement of petroleum have been sustained at elevated levels, following a sharp spike at the end of February.
These prices are mainly affected by the international oil price, which has climbed steadily since the start of the year.
Crude has rallied strongly in the opening months of 2021, supported by the vaccine-aided recovery from the pandemic and the decision by the Organisation of Petroleum Exporting Countries (OPEC) and its allies to keep a tight rein on supplies.
Prices have long shot past the lows experienced in 2020 as a result of hard lockdowns in high production countries in response to the Covid-19 pandemic.
Oil prices are now trading at between $66 (WTI) and $70 (Brent Crude) a barrel – this is compared to the $50 dollar mark seen in December, and up from $63 a barrel in February.
According to analysts, oil markets have been overtaken by bullish sentiment, despite data pointing to more subdued demand for the fossil fuel in 2021. The positive sentiment was spurred by oil producing countries announcing cuts to output, while expectations for oil demand to return to normal, pre-Covid levels persist.
However, OPEC reports have projected a deep cut in oil demand for the year, and some analysts have called the current optimism – with some predicting prices at $100 a barrel – removed from reality.
Reflecting optimism about the scope for further gains, Citigroup’s full-year Brent outlook was raised $5 a barrel to $69 amid the OPEC+ curbs, Bloomberg reported.
While the bank cautioned in a note that oil wasn’t on the cusp of a so-called ‘supercycle’, it said Brent could hit $75 or even $80 over the next few months.
April will also see tax changes around the fuel price come into effect.
In National Treasury’s 2021 budget, it was announced that motorists will pay an inflation-related increase of 15 cents/litre in the general fuel levy and a higher-than-inflation increase of 11 cents/litre in the Road Accident Fund levy.
This will add a combined 26 cents per litre to fuel prices from April, which would push increases to over R1.00 for petrol.
This is how the expected prices would reflect:
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