The most recent weekly estimates from the Central Energy Fund (CEF) point to gas problems for motorists in December; However, there is news for diesel after months of sharp increases.
According to weekly CEF data as of November 18, 2022, oil costs recently show insufficient recovery (and possible increase) of around 90 cents per liter for December. While this is still negative for motorists, it shows the opposite, downward trend. 30 cents from a week ago.
Diesel prices, on the other hand, have turned around and are now expected to drop 68 cents consistent with the liter.
The ministry emphasizes that the snapshot is not predictive, but serves as an indication of the value of the fuel. As market conditions replace the month, so do forecasts.
These are the expected value changes for the end of the third week of November.
The change in diesel prices is largely due to a lower base price driven by a slump in the oil market, driven by a stronger rand against the dollar.
The oil market fluctuated somewhat in November, driven by two opposing narratives about demand. The first narrative, which supported higher oil prices, was that of higher demand for oil versus limited supply.
As the Northern Hemisphere approaches the winter months, demand for fuel has increased. However, this comes amid sanctions imposed on Russian oil due to its ongoing war with Ukraine, as well as the reduction of Saudi Arabia and OPEC countries.
The counter-narrative is one of the much weaker demands as China, one of the world’s hardest working nations, pursues a “zero covid” strategy, shutting down production and industry in search of eliminating the virus.
While oil costs were supported by rumors about easing restrictions in the Chinese market, new outbreaks and the first recorded covid death in several months prompted the country to increase restrictions, clouding productivity prospects.
The global benchmark for Brent fell below $87 a barrel after falling nearly 9% last week.
The oil level reduction supports the reduction of fuel at the local level, which has been further reinforced with a more powerful rand.
The rand has gained ground against the dollar in recent days, but due to local events or factors. As has been the case for most of the year, the rand, along with other emerging market currencies, has been rattled by the whims of the global economy. markets
This has been largely driven by the US Federal Reserve. The U. S. and interest rate hikes, with a strong hike cycle pushing investors into a “risk-free” mindset at the expense of emerging markets, adding South Africa.
However, in more comments, the Fed has softened its aggressive tone, and analysts expect the speed of U. S. interest rate hikes to slow down. U. S. Economy from the U. S. is still expected to decline. The U. S. economy experienced a rate increase of 50 basis points in December.
The rand’s exchange rate appreciated more compared to a weaker dollar. The rand is now trading around R1/$ more powerful than at this time last month.
The Ministry of Energy will announce official changes to gas and diesel before its effective date on Wednesday, December 7, 2022.
Read: Here is the expected fuel value for December
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