Mid-month data from the Central Energy Fund indicates that South African motorists are heading into the new year with fuel price relief on the cards, as both petrol and diesel prices are expected to decline in January. The outlook is being supported by a stronger rand against the dollar and a notable pullback in global oil prices, both of which are improving fuel price recoveries and pointing to lower costs at the pumps if current trends hold.
Key Takeaways
- Fuel price relief expected in January: Mid-month data from the Central Energy Fund points to lower petrol and diesel prices in the new year, supported by a stronger rand and softer global oil prices, which are improving fuel price recoveries.
- Diesel shows the largest potential cuts: Diesel prices are currently reflecting an over-recovery of close to R1 per litre, suggesting more substantial reductions than petrol and potential downstream benefits for transport costs and inflation.
- Final prices are not yet locked in: While current trends strongly indicate lower prices, exchange rate movements and oil market shifts in the final weeks of the month could still influence the Department of Petroleum and Mineral Resources’ final adjustment.
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Currency and Oil Movements Supporting Lower Prices
The appreciation of the rand heading into the new year has played a central role in keeping fuel price recoveries in positive territory, while a pronounced pullback in international oil prices has further eased pressure on local petrol pricing.
Where petrol had previously shown mixed signals earlier in the month, current readings now indicate consistent positive recoveries, with petrol prices reflecting gains of approximately 15 to 17 cents per litre at the mid-month stage.
Diesel pricing continues to outperform petrol, with recoveries remaining particularly strong. Current data indicates an over-recovery of close to R1 per litre for diesel, reinforcing expectations of substantial price reductions in January.
Mid-Month Fuel Price Projections
Based on the latest available mid-month data, the following adjustments are currently anticipated for the January fuel price announcement:
| Fuel type | Measure / grade | Anticipated adjustment (Jan announcement) | Direction | Unit |
|---|---|---|---|---|
| Petrol | 93 | 15 | Decrease | cents per litre |
| Petrol | 95 | 17 | Decrease | cents per litre |
| Diesel (wholesale) | 0.05% sulphur | 94 | Decrease | cents per litre |
| Diesel (wholesale) | 0.005% sulphur | 102 | Decrease | cents per litre |
| Illuminating paraffin | Not specified | 69 | Decrease | cents per litre |
The Central Energy Fund does not publish daily snapshot figures for LP Gas, which means that it is not currently possible to estimate expected price movements for this fuel category for December or January.
Limitations of Mid-Month Data
While the daily and mid-month figures provide a useful guide to price trends, they do not represent a guaranteed outcome. Fuel price recoveries can still shift meaningfully in the final weeks of the month, depending on currency fluctuations and movements in international oil markets.
The Department of Petroleum and Mineral Resources only confirms the final fuel price adjustments a few days before the new prices come into effect, meaning that motorists should treat current projections as indicative rather than definitive.
Nevertheless, the data offers a strong directional signal and reflects prevailing market conditions observed during the first half of the month, suggesting a high likelihood of price relief if current trends persist.
Rand Dollar Exchange Rate Developments
As the year approaches its close, the rand has maintained a relatively strong position against the US dollar, trading at levels close to R16.80 to the dollar.
The local currency gained additional support earlier in the week, aided by rising gold prices and renewed investor focus on the final set of economic data releases for the year, which may offer insights into the underlying strength of the South African economy.
Gold prices remained near a seven week high amid a softer US dollar and declining US bond yields. Given South Africa’s status as a significant producer of precious metals, firmer bullion prices often translate into improved support for the rand.
Periods of sustained rand strength have historically coincided with softer fuel prices and improved household purchasing power.
Market analysts have noted that the rand has been able to take advantage of a weaker dollar environment, sustaining its move below the R16.90 level and opening the door to further gains before the end of the year.
From a technical perspective, analysts believe the rand could still test levels in the mid R16.60 range, which would further reinforce the positive momentum that has driven the currency’s appreciation over the course of the year.
Global Oil Market Trends
International oil prices are heading towards an annual decline, with global supply projected to exceed demand both in the current year and into the next. This imbalance is being driven by increased production from OPEC+ members as well as rising output from countries in the Americas outside the group.
The International Energy Agency has indicated that the expected surplus in the coming year could be the largest on record, placing sustained downward pressure on crude prices.
More recently, oil prices have continued to slide, with Brent crude falling below the $60 per barrel mark for the first time since May. This decline reflects growing evidence that global supply is outstripping demand, particularly as diplomatic efforts intensify to bring the conflict in Ukraine to an end.
Brent crude is the primary benchmark used in South Africa’s fuel price formula, making its movements especially important for local pump prices.
Signs of broader weakness are emerging across oil markets, including brief shifts into a bearish contango structure for Middle Eastern crude earlier in the week.
Despite these developments, certain segments of the oil market remain in backwardation, which continues to signal pockets of supply tightness in specific regions.
Lower oil prices may provide welcome relief to central banks seeking to cut interest rates next year by easing inflationary pressures. At the same time, the decline poses challenges for oil producing nations and energy companies whose budgets rely on higher price levels.
The recent downturn in prices has also been influenced by growing expectations of progress towards ending the war in Ukraine, following indications of agreement between Ukraine and the United States on legally binding security guarantees.
Expected Impact on Pump Prices
Based on current projections, the anticipated fuel price changes are expected to translate into the following inland and coastal pump price adjustments. Diesel figures reflect wholesale prices, while actual pump prices may vary.
Inland Fuel Prices
| Fuel type | Grade / specification | December price | Expected January price | Direction |
|---|---|---|---|---|
| Petrol | 93 octane (inland) | R21.26 | R21.11 | Decrease |
| Petrol | 95 octane (inland) | R21.41 | R21.24 | Decrease |
| Diesel (wholesale) | 0.05% sulphur | R19.78 | R18.84 | Decrease |
| Diesel (wholesale) | 0.005% sulphur | R20.02 | R19.00 | Decrease |
| Illuminating paraffin | Not specified | R13.73 | R13.04 | Decrease |
Coastal Fuel Prices
| Fuel type | Grade / specification | December price | Expected January price | Direction |
|---|---|---|---|---|
| Petrol | 93 octane (coastal) | R20.47 | R20.32 | Decrease |
| Petrol | 95 octane (coastal) | R20.58 | R20.41 | Decrease |
| Diesel (wholesale) | 0.05% sulphur | R18.95 | R18.01 | Decrease |
| Diesel (wholesale) | 0.005% sulphur | R19.26 | R18.24 | Decrease |
| Illuminating paraffin | Coastal | R12.72 | R12.03 | Decrease |
These projections suggest a favourable start to the year for South African motorists, provided current currency and oil market trends remain broadly intact through to the final price determination.
Conclusion
Overall, the mid-month fuel price data paints a positive picture for South African motorists as the year comes to an end, with a combination of a firmer rand and weaker global oil prices setting the stage for meaningful relief at the pumps in January. While final prices will only be confirmed shortly before implementation and remain sensitive to late-month currency and oil market movements, current trends suggest that both households and businesses could benefit from lower fuel costs at the start of the new year, easing pressure on transport expenses and broader living costs if conditions remain stable.
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