By Eliaser Ndeyanale
FOLLOWING the dropping of fuel prices at neighbouring South Africa, the local fuel prices are expected to drop early next month giving motorists a bit of relief in their pockets.
South African leading motoring organization Automobile Association (AA) announced on Monday this week that South Africa expects significant fuel price drop in September, with petrol prices expected to decrease between 55c and 64c a litre.
AA says that despite some rand weakness against the US dollar in the last few days, the South African currency unit has traded in a fairly tight band around R12.91 to the dollar since mid-month. The result is that most of the benefit of lower international product prices will be passed on to the motorist.
“The rand has weakened considerably against the US dollar since the last week of July.
“Fortunately for South African fuel users, international oil prices have continued to slip, meaning there is still a reasonable prospect of a drop in the fuel price at the end of the month,” said AA
On Monday afternoon the rand traded at R12.91 against the US dollar, while Brent North Sea crude for October was unchanged at $49.03 a barrel.
“The combination of elevated stockpiles in the US and increasing production from OPEC, sluggish demand growth, and a stronger US (dollar) would continue to pressure oil prices,” Bernard Aw, market strategist at IG Markets, told AFP.
The AA said without the impact of the exchange rate’s recent poor showing, the predicted drop in the petrol price would have been in a range of 75c to 83c a litre.
The AA expects diesel to drop by between 53c and 57c a litre, and illuminating paraffin by 60c a litre.
“While a slight levelling off has become apparent in the downward trend of international petroleum prices, we are confident that fuel prices will drop at the end of August.
“However, if oil prices flatten out, motorists will be at the whim of the rand in coming months,” the AA said.
Ministry of Mines and Energy liaison officer Ten Hasheela said the Ministry of Mines will issue a media release regarding fuel prices on Friday, August 28 for adjustments on September 2.
“We will however at this point not confirm what the prices will be, as there are a lot of factors that influence fuel prices. The release will be forwarded to you once ready,” said Hasheela. -Additional report AFP