Fuel Price Cut Likely in December 2016

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Based on unaudited mid-month data, the Automobile Association (AA) says that fuel prices in South Africa are likely to decrease in December 2016.

Motorists in South Africa can expect some relief at the fuel pumps come December 2016 as a result of lower international oil prices and a stronger Rand/US Dollar exchange rate during the month of November.

Commenting on unaudited mid-month data, the AA said "International oil prices remained stable throughout October, but have been in decline since November began. The Rand / US dollar exchange rate firmed over the same period, making a welcome contribution to the picture”.

The data suggests a petrol price reduction of 45 cents per litre while the price of diesel could be slashed by as much as 38 cents per litre.

However, the recent US election result 'Trumped' and weakened the Rand/US Dollar exchange rate and the AA warns that “if the local currency did not return to its previous levels, the fuel price picture could be quite different at month-end.” The Rand/US Dollar exchange rate is currently at R14.209.

The potential reduction in the fuel price in December should be viewed with caution as other significant factors such as possible ratings downgrades could affect the future outlook negatively. "In addition to short-term fluctuations, the rand remains exposed to a possible ratings downgrade in South Africa," the AA commented.

Although a potential fuel decrease will be welcomed during the festive season, general volatility could have a negative impact on fuel prices in the short to medium term.

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