Here is the expected price of gasoline for June

In the middle of the month, data from the Central Energy Fund points to an increase in the price of gasoline in South Africa for June, while diesel drivers could see another cut.

CEF data shows that gasoline is on track for a price increase of between 42 and 49 cents per liter from June 3, while diesel could decrease between 54 and 56 cents per liter.

The projected price changes would follow two consecutive months of major price cuts, with gasoline and diesel prices falling to R3.60 and R2.90, respectively, in April and May.

The sharp cuts in fuel prices were due to falling global oil prices, as the coronavirus pandemic led to a massive oil oversupply when industries closed due to various blockades across the world.

Local prices could have dropped further, had it not been for the weak rand / dollar exchange rate, which pushed R19.00 / $ levels after South Africa’s own blockade strategy exacerbated other economic problems, including the downgrade of Moody’s credit rating.

So far in May, circumstances in both areas have changed somewhat.

Oil price

In terms of movement in international prices (which is closely related to oil prices), they have increased, even more so for gasoline than for diesel, contributing to an under-recovery in the latter of around 50 cents per liter . For diesel, the lower price has resulted in an excessive recovery of the same value.

Oil is heading for a third weekly gain on signs that the market is slowly rebalancing as major producers cut supply and consumption recovers after a historic collapse in demand due to the coronavirus, Bloomberg reported.

Brent crude has risen above $ 30 a barrel this week, from levels below $ 10 in the not-too-distant past.

Oil has still fallen more than 50% this year after a drop that brought prices below zero and the path back to pre-virus demand levels seems long and uncertain. OPEC this week released a grim assessment of crude markets for the second quarter and the US Federal Reserve. USA He warned of a lasting recession, but efforts to rebalance the market appear to be working.

“Market sentiment has become cautiously constructive since the end of April and I hope it will remain as such unless there are big setbacks in terms of infection rates,” said Vandana Hari, founder of Vanda Insights in Singapore. Demand expectations will remain “fragile, with a nervous eye on how economies are doing in the reopening,” he said.

The rand and the running of the bulls

Although the rand / dollar exchange rate has not improved much in the last month, the currency has settled in the region of R18.50 / $, resulting in a marginal over-recovery for both gasoline and the diesel for the sum of 1 cent per liter.

According to Bianca Botes, executive director of Peregrine Treasury Solutions, it has been an uneventful week for the rand, but the currency is still tied to global sentiment around the coronavirus and various blocking measures.

“The key issues remain the same, and little in the way of new developments have reached the markets, leading to a limited range. From a data perspective, the numbers continue to show us the chaos that Covid-19 and the subsequent blockade has had in the economies, and more negative data is expected in the coming weeks, ”he said.

Locally, markets will be in command of any regulatory move for the next two weeks, as the country prepares (mostly) to move to Block 3 level.

While the government has not yet provided details on what will and will not be allowed below this level, or in fact what areas they will be allowed to pass, earlier drafts of the closure plan pointed to further opening of the economy.

However, according to Intellidex analyst Peter Attard Montalto, the government has indicated that the areas most affected by the coronavirus pandemic are likely to remain at level 4. These areas are the most economically active, and the analyst estimates that more than half of the country Economic production could still be subject to strict restrictions.

As things currently stand, in the middle of the month, the expected changes are as follows:

• Petrol 95: 49 cents per liter increase;
• Petrol 93: increase of 42 cents per liter;
• Diesel 0.05%: decrease of 56 cents per liter;
• Diesel 0.005%: decrease of 54 cents per liter;
• Illuminating paraffin: decrease of 75 cents per liter.

The following table describes how these changes could be reflected in June, if current conditions persist:

Read: Here is the official price of gasoline for May