Robust rand reduces petrol price pressure

Cape Town - Fuel prices will increase in February but not as much as expected, following the rand's comeback against the US dollar in late January.

Commenting on unaudited month-end fuel price data released by the Central Energy Fund, the Automobile Association (AA) said on Friday the strengthening of the rand by about 10 cents to the dollar has caused a marked improvement in the fuel price picture since mid-month.

"International oil prices remain near their recent highs, but the rand has strengthened around ten cents against the US dollar since January 15," the AA said.

Petrol is now expected to cost 30 cents per litre more, diesel 22c, and illuminating paraffin 16c. On January 16 the AA predicted the petrol price per litre will rise by 44c, diesel by 37c, and illuminating paraffin by 31c.

Despite the breather, the AA warned motorists not to rely on a softer fuel price position in the medium term.

"International oil prices have been on an upward trend since the start of December 2016," the AA said.

It added that uncertainty still exists about where oil will find its new price equilibrium when Opec's production cuts start to filter into the global economy.

The AA also pointed out that the rand remains vulnerable to political and economic shocks.

By midday on Friday, the rand was trading at R13.41/$ and oil was selling at $56.03 a barrel, compared with R13.62 and $55.64 respectively at the AA's previous call on fuel price hikes.