Cape Town - The price of Brent crude oil fell from its highest level in two weeks on Thursday, amid speculation that US negotiations over the country's budget deficit have made little to no progress over the last few days.
If the rand-dollar exchange rate remains stable, it could translate into another petrol price breather on January 2.
Latest figures from the department of energy show an average over-recovery of 9.3 cents per litre for gasoline and 19.4c/l for diesel since November 30.
Tuesday's over-recovery was 16.9c for petrol and 13.4c for diesel. If this can be maintained until December 26, it could mean a reduction of 11c/l on petrol and 17c/l on wholesale diesel.
South African fuel prices are a calculated on an import parity basis. The formula is based on fuel prices at refineries in Italy, Singapore and the Arabian Gulf.
Shipping costs, cargo insurance and other costs are added, the price is converted from dollars to rands and then local levies such as tax, regulated profit margins, customs, distribution costs and the Road Accident Fund levy are added to calculate the retail price of petrol and the wholesale price of diesel.
The fuel tax changes only once a year, in April. It's a fixed amount in cents and is unaffected by the monthly fuel price adjustment.
This monthly adjustment ensures that South African prices stay in line with prevailing international market prices.
On Thursday, Brent oil futures for February declined by 0.6% in low trading volumes on the London futures market to $109.73 per barrel. The volume of total futures contracts traded on the market was 23% below the average over 100 days.
Brent crude still topped the US oil price benchmark, West Texas Intermediate, by over $20. West Texas Intermediate traded at $89.92 a barrel in New York on Thursday.
The price of Brent crude rose by 2.6% this year.
US oil prices this year on average were $17.42 per barrel lower than Brent, largely due to the increase in the excavation of unconventional oil and gas resources in America.
If the problem of America's so-called fiscal cliff - the simultaneous implementation of budget cuts and tax increases - is not resolved, the anticipated recession could dent the demand for oil and push prices down.
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