The Price of Petrol May Stay Flat this August

It is expected to be a flat month in terms of petrol prices for August according to the latest data from Central Energy Fund, but diesel drivers could be expecting some good news. 

As it stands, it seems there will be a small increase for 95 octane of 2 cents per litre and 93 grade will decrease by a single cent. Diesel, on the other hand, is currently being predicted to decrease by 22 cents per litre. 

The flat rate in petrol prices expected for August is due to a reversal in trends for both international petrol prices the rand/dollar exchange rate. 

Rand Has Gained New Strength

The rand has gained new strength the past week or so mainly due to the local sentiment improving after the government announced bailout plans for Eskom and international movements that restored the appetite for investors to go for riskier assets. 

A new rescue plan has been announced for Eskom by the National Treasury. The plan would see Eskom being allowed to access funds set aside for its turnaround a lot sooner.

This plan has put investors at ease due to the government not leaving the power utility in the lurch and that it would be receiving the support it needs in order to improve its financial situation. 

On top of this governor, Lesetja Kganyago has been reappointed for another 5-year term. This has reinforced local sentiment and has also backed the government stance on continuity at the central bank, starving off talk of nationalism and mandate change. Also, the Reserve Bank’s Monetary Policy Committee could possibly be announcing a rate cut this Thursday.

Further afield, a mix of contradictions has come from US data, but from the latest reporting, it would seem that the FED will be cutting rates at the end of the month.  With the US economic data pointing to a stable market, investors have rekindled their appetite in riskier assets in emerging markets. 

Oil Prices Are on The Rise Again

Oil prices have been in decline for weeks, but the international oil costs are on the rise again. 

The drop in price is due to general global economic slowdown putting pressure on demand, which has been further aggravated by the volatile US-Iran relations and an extended production cut in OPEC regions. 

However, there has been a price increase in oil over the last week due to geopolitical tension in the Persian Gulf, outrages in Venezuela and Iran, the brewing storm in the Gulf of Mexico as well as the rate cut by US FED.

The rally may run out in the medium term, but it could top out with Brent Crude rising above $70 a barrel again according to the Standard Charted.  

The recent petrol price decreases in South Africa have been driven by falling oil prices, so the rally and any further increases will then have the opposite effect. 

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