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Another substantial fuel price drop expected in January 2019 - here's what you might pay

Dec 19, 2018
Another substantial fuel price drop expected in January 2019 - here's what you might pay

The Automobile Association of South Africa is predicting another substantial fuel price reduction January in 2019, which should come as great news for local motorists coming out of the Festive Season and preparing to return to work and school.

"But the exchange rate could spoil the party according to the unaudited mid-month fuel price data released by the Central Energy Fund," the AA said.

"The South African fuel price has yet to fully catch up with considerably lower international petroleum prices, which have stayed at the plateau they reached at the beginning of December.

"However, a sharp depreciation of the Rand versus the US dollar has been noticeable since December 4, and we will be monitoring this trend closely for the remainder of the month."

The AA said that tThe Rand, which bottomed out at R13.70 to the US currency in the first week of December, took a sharp turn for the worse, reaching nearly R14.50 by December 11 before staging a slight recovery. 

"This hefty swing could offset oil price gains quite markedly if it continues."

Fuel prices expected to drop by more than a Rand in January 2019

"Petrol is set for a R1.19 drop per litre, with diesel down a predicted R1.44 and illuminating paraffin lower by R1.32," the AA said.

"The expected decreases are attributable to continued downward movement in international product prices. Currently, the international product prices used in the calculation of the Basic Fuel Price, is USD$1.44/gallon, showing a continued decline in this price since the beginning of November when it traded at USD$1.80."

It said that up to 95% of the expected drop in fuel prices in January can – at this stage – be ascribed to these lower product prices, with the Rand/US dollar exchange rate contributing only five percent of the forecast decrease.

"Much will depend on political and economic stability during the remainder of December, both at home and abroad," the association described.

"The local economic outlook remains sluggish, while international trade considerations and political instability in oil-producing regions could conspire to push international oil prices back up. 

"Despite this, we are hoping these factors are not enough to deny South African fuel users another much-needed breather at the pumps at the start of the new year."

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