Gasoline and diesel prices are expected to fall sharply in early June as Brent crude oil hits its lowest level in three months.
According to the latest estimates from the Central Energy Fund (CEF), the price of 95 unleaded petrol is expected to fall by about 87 cents per litre, while wholesale diesel prices could fall by 87 to 92 cents per litre.
I was able to cut the lighting paraffin at almost 78c.
Fuel prices in South Africa are determined primarily by international oil and fuel costs and the rand exchange rate, as oil prices are denominated in dollars.
Brent crude was trading around $82 a barrel on Wednesday, up from nearly $90 a month ago.
Bloomberg reported that oil inventories in the US and Europe are rising, putting pressure on prices. Fuel demand has declined due to the warm winter in the Northern Hemisphere.
Still, despite recent losses, Brent is up 7% year to date in 2024 amid instability in the oil-rich Middle East, drone attacks on Russian refineries, and OPEC+ supply cuts . The group of oil-producing countries is scheduled to meet on June 1, with further curbs expected.
Bloomberg reported that international diesel prices are also under pressure as liquefied natural gas-powered trucks become more popular in China.
Meanwhile, the rand is trading at its strongest levels since the final quarter of 2023. On Wednesday, the rand was at R18.17/$. So far, the local currency has fallen by 5.5% in a month, as concerns about the ANC-EFF coalition government waning after the election, solid commodity prices, and renewed optimism about the possibility of a US interest rate cut. It has increased by almost %.
Final fuel prices for June will be determined next week. Fuel prices are adjusted on the first Wednesday of June.
Earlier this month, gas prices rose by 37 cents a liter, reaching levels last seen in October 2023. Diesel prices have been cut to their lowest level since February this year.
