As December approaches, petrol price is predicted to increase. South African motorists may need to prepare for a potential rise in petrol and diesel prices. Early data suggests that fuel prices are again under pressure, reflecting the economic forces at play. November began with an under-recovery in fuel pricing, a signal that price increases could be on the horizon unless conditions improve before month-end.

Petrol Price: Under-Recovery Signals and the CEF’s Early Data

Initial data from the Central Energy Fund (CEF) indicates an under-recovery in both petrol and diesel prices, hinting at possible increases by December. Currently, petrol is starting the month with an under-recovery of between 7 and 16 cents per litre, while diesel faces a more significant under-recovery of around 58 cents per litre. This trend mirrors October, which also started with strong trading but ultimately ended in a price hike of 20 cents per litre in early November.

For December, early indicators suggest that petrol (93 octane) could rise by 7 cents per litre, while petrol (95 octane) may increase by 16 cents per litre. Diesel prices are forecast to see more substantial hikes, with a 59-cent increase for 0.05% wholesale diesel and a 57-cent increase for 0.005% wholesale diesel. Illuminating paraffin is also expected to rise by 59 cents per litre. However, these numbers are preliminary, and there’s a chance they could adjust as November progresses.

Currency and Global Oil Prices Drive Volatility

The performance of the South African rand and global oil prices remain pivotal in determining fuel costs. With recent US election developments, the rand has experienced notable volatility. Market reactions to a potential win for former US president Donald Trump have already led to a weaker rand, which dropped to R17.80/$. If this trend persists, the impact could further pressure South African fuel prices, as a weaker rand makes fuel imports more expensive.

On the oil front, global oil prices have remained under $75 per barrel, but this price range still plays a role in local price under-recoveries, estimated to account for 5 to 57 cents per litre. The upcoming OPEC+ meeting in December could have implications for the global oil supply, as oil-producing nations are contemplating delaying production hikes in response to weak demand. Economic challenges in China, which has shown signs of slowing growth, may also contribute to weakened demand for oil. Meanwhile, disruptions due to weather-related events, such as a tropical storm in the Gulf of Mexico, could offset potential increases in production, creating a balancing effect.

Future Market Trends and Potential Outcomes

Economic analysts suggest that the middle of November could provide a clearer outlook on the final December pricing. Should the rand regain strength or global oil prices dip below the current range, South African motorists may avoid some of the anticipated price increases. Conversely, ongoing volatility in currency and oil markets could lead to a more substantial hike.

Ultimately, December’s fuel price changes will be influenced by global events, such as developments in the Chinese economy, oil production adjustments by OPEC, and the impact of the US election. While early indicators point to a potential increase, there remains a level of unpredictability that could shape the final outcome.