Tag: oil

Source: News24

According to the latest data from the Central Energy Fund, petrol and diesel prices currently look set for large increases in the first week of June.

Adding to the blow is the return of the full general fuel levy (GFL), which government cut by R1.50 per litre for two months. The levy is supposed to be restored at the end of May.

This will increase the levy for petrol from R2.35 to R3.85 per litre. The levy on diesel will be hiked from R2.20 to R3.70 per litre.

In addition, based on current data from the CEF, petrol is expected to increase by between R1.93 and R1.97 a litre, diesel is expected to increase by between R1.60 and R1.62 a litre, and illuminating paraffin is expected to climb by a R2.14 a litre.

The Automobile Association (AA) says together with the return of the general fuel levy this will “result in price shocks never seen before”.

In combination, the petrol price could be around R3.47 a litre more expensive than current levels.

“In late March government reduced the GFL by R1.50 for April and May which brought temporary relief to consumers. The big question now is how government plans to deal with rising fuel costs from June onwards, especially given that baseline prices are forecast to move significantly upwards in June,” notes the AA.

The association says it must be noted that these price increases reflect data from the middle of the month, and that the final data may vary between now and when the adjustment is finally made.

Local fuel prices are determined by international oil prices, as well as the dollar-rand value, as South Africa buys oil in dollars.

The rand is currently trading around its worst levels since November last year, while Brent crude remains close to $110 per barrel.

The AA says while government’s relief on the GFL was welcome, a longer-term solution is needed. It says when government announced the relief in March, it also noted other measures proposed by the Minister of Mineral Resources and Energy to be introduced after the expiry of the temporary measures.

“We are rapidly nearing the end of May and the fuel outlook is looking bleak. Government needs to address this issue sooner rather than later; consumers are anxious about what lies ahead, and government should allay these concerns by indicating as early as possible what steps it will be taking to mitigate against rising fuel costs,” says the AA.

Petrol and diesel prices have surged by more than a third over the past year.

 

Source: News24

Energy prices have surged since the Russian invasion of Ukraine and, along with other commodities, are likely to remain at “historically high” levels through 2024, endangering economic growth, the World Bank warned on Tuesday.

“This amounts to the largest commodity shock we’ve experienced since the 1970s,” said Indermit Gill, the World Bank’s vice president for equitable growth, finance and institutions.

The shock — which is expected to push energy prices up 50% this year — is being aggravated by trade restrictions and rising prices for food, fuel and fertilisers.

“These developments have started to raise the spectre of stagflation,” Gill warned in a statement on the World Bank’s Commodity Markets Outlook report.

Echoing the call from other officials at the World Bank and International Monetary Fund in recent days, he urged governments to “take every opportunity to increase economic growth at home and avoid actions that will bring harm to the global economy.”

The report said the increases in energy prices in the past two years have been the largest since the 1973 oil crisis when the OPEC group of oil-producing countries declared an embargo.

Amid the war and Western sanctions on Moscow, the price of Brent crude is expected to average $100 a barrel this year, the highest since 2013, the report said.

European natural gas prices are expected to be double what they were in 2021 and — along with coal — hitting record levels, it added.

Prices for grain, of which Russia and Ukraine are large producers, and fertilisers have seen the biggest price jumps since 2008, with wheat prices reaching an all-time high this year.

Overall, non-energy commodity prices, including agriculture and metals, are projected to jump 20% this year before easing, but will remain above their five-year average, according to the World Bank.

Price hike double-blow to hit South Africa

Source: Supermarket & Retailer

South African motorists can expect another record-high petrol price hike in April, with suppliers and manufacturers also likely to pass on additional costs to consumers as they cannot absorb these rapid fuel increases, say economists at the Bureau for Economic Research (BER).

The combination of the rising oil price on fuel and food costs will lead to rapidly increasing inflation, the group said in a research note on Monday (7 March).

The BER now forecasts that headline Consumer Price Inflation (CPI) will average 5.5% in 2022 – up from its initial 5% forecast in January. Given the further oil price surge in recent days, this updated forecast is already outdated, with further upward revisions required if oil stays at these levels, it said.

“This is especially the case as a growing list of local companies are commenting that they can no longer absorb a sustained rise in input costs and will now start to pass these on to the end consumer.

“These second-round price effects risk compounding the direct impact that the higher fuel price will have on driving measured South Africa inflation higher.”

It added that the additional upward pressure on inflation will squeeze household purchasing power across the globe, especially in the Euro Zone and the UK where gas forms an important part of the energy mix.

“Therefore, by exacerbating global price pressures, the Russia-Ukraine war will weigh heavily on the near-term world and domestic growth,” it said.

Because of the likely adverse domestic growth impacts of higher fuel and food prices, as well as the downside global growth risks, the BER said that it expects the South African Reserve Bank (SARB) will increase the policy interest rate by another 75bps in 2022.

“The next 25bps hike is pencilled in for the end of March. However, given rising risks of secondary price effects emerging and in order to anchor inflation expectations, the risk is that the SARB sees the need for a more aggressive, front-loaded hike in March. Still, such a move will risk compounding the impending hit to real GDP growth.”

Petrol price hike set to hit South Africa

Source: Supermarket & Retailer

Following a tumultuous first trading week of 2022, global equity and bond markets were calmer last week. There was more action in commodities, with the one-month Brent crude oil future ending the week more than 5% higher, the group said in a research note on Monday (17 January).

“A combination of oil demand holding up despite the Omicron-driven surge in Covidinfections (especially in the US) and supply disruptions boosted the oil price,” it said.

“After some reprieve on the domestic fuel price front in January, the renewed rise in the oil price is likely to result in another hefty fuel price increase in February.”

Rate hike

There will also be a significant focus on inflation data this week ahead of the South African Reserve Bank’s interest rate decision on 27 January, the BER said.

“We expect the headline CPI to increase by 5.8% y-o-y (consensus is at 5.7%), up from 5.5% in November. This is courtesy of a projected 0.4% m-o-m rise, driven by the more than 70c/litre rise in both the petrol and diesel price at the start of that month, as well as the quarterly survey of rental costs.

“As a result of the seasonal rise in meat prices, the food category should also add to the overall monthly CPI increase.”

South Africa is likely to see at least three interest rate hikes in 2022 as the South African Reserve Bank (SARB) has indicated that it will begin unwinding its accommodative monetary policy stance, say economists at Momentum Investments.

In a research note on 4 January, the group said that the SARB’s quarterly projection model calculates a steep interest rate hiking cycle – resulting in interest rates of 5.75% by the end of 2023 and 6.75% by the end of 2024.

“In our view, well-behaved inflation, anchored inflation expectations, and a pedestrian growth outlook advocate a more moderate interest rate hiking cycle,” Momentum said.

“We expect the SARB to hike interest rates thrice by a cumulative 75 basis points in 2022 and a further three times by another 75 basis points in 2023.”

Electricity hike

The National Energy Regulator of South Africa (Nersa) is also expected to table its 2022/23 price determination in parliament at the end of February or the beginning of March.

Eskom chief financial officer Calib Cassim has confirmed that the state-owned power utility has applied for an electricity price increase of 20.5% for its 2023 financial year, set to take effect from 1 April 2022.

On 5 March 2021, Nersa approved a hike of 15.06% for Eskom’s direct customers, which was subsequently implemented on 1 April 2021. A hike of 17.80% for municipalities was implemented on 1 July 2021.

Cape Town mayor Geordin Hill-Lewis has warned that similar increases would simply be unaffordable for most South Africans this year.

“Like the majority of South Africans, many Capetonians are struggling to make ends meet. The pandemic and national lockdown led to the closure of hundreds of businesses in our City and the loss of thousands of jobs. Our residents are faltering under the burden of the rising costs of energy, fuel, food, and basic consumer goods.

“The consumer price index (CPI) is currently stated as 5,5%; this would have been a more reasonable tariff increase for Eskom. The price of electricity has risen by 307% over the past 13 years, far exceeding inflation. Despite paying more for power, South Africans have experienced an unreliable electricity supply — 2020 and 2021 were two of the worst load shedding years on record.”

 

Petrol breaks R20/litre mark

By Jason Woosey for IOL

South African motorists and commuters are facing a full blown crisis with both petrol and diesel set to go up by a massive margin from 1 December, pushing the petrol price past R20 per litre for the first time ever.

According to the Department of Mineral Resources and Energy, both grades of petrol will go up by 81 cents per litre from Wednesday, December 01, while 50ppm diesel will increase by 74 cents and 500ppm by 72 cents. Illuminating paraffin will rise by 42 c/l.

The December fuel price adjustment will see the cost of 95 Unleaded Petrol rising to R19.63 per litre at the coast and R20.35 in the inland regions, where 93 Unleaded will rise to R20.13.

The wholesale price of diesel will increase to R17.30 at the coast and R17.92 in Gauteng, keeping in mind that the unregulated retail prices (which vary between outlets) will be somewhat higher than that.

What is driving the price higher?

The price of Brent Crude oil increased marginally during the month of October, from an average of $82.50 per barrel to $83.00. This alone would not have made a big difference to the December fuel price, however, the rand depreciated from an average of R14.72 in the previous month to R15.85 this month, the energy department said. The Slate Levy, which is used to compensate the industry for cumulative under recovery, also saw an increase of 26.30 c/l.

Fuel taxes and levies currently account for R6.11 per litre of fuel, a fact which is proving increasingly controversial as higher oil prices and a weak rand drive prices up on a monthly basis.

Earlier this year, Outa released a graphic showing that more than 50% of the cost per litre of petrol is made up of levies:

Petrol approaches R18 per litre

By Jason Woosey for IOL

South African motorists, who are already reeling from record fuel prices, will have to fork out even more from Wednesday, August 4, as the Department of Energy has announced steep price increases for both petrol and diesel.

Both grades of petrol are set to increase by 91 cents a litre, while the wholesale price of diesel will rise by 55 cents. This means that from Wednesday, South Africans will pay R17.58 for a litre of 95 Unleaded petrol at the coast and a whopping R18.30 in the inland regions, where the cheaper 93 Unleaded petrol will now retail for R18.11. The price of 50ppm diesel will rise to R15.06 at the coast and R15.66 inland, but keep in mind that these are wholesale prices and the (somewhat higher) retail prices for diesel will vary between fuel stations.

How much more for a tank?

What do these price increases mean in terms of the cost of a tank? Putting 35 litres of 93 Unleaded petrol into the 40 litre tank of a Volkswagen Polo (assuming you’re sensible enough to never arrive with less than five litres on board) will now cost you R634, or R31.85 more than it currently costs. Putting 50 litres into a mid-sized car like a Toyota Corolla will now cost R905.50, which is R45.50 more. 75 litres of diesel in a large SUV like the Toyota Fortuner, or a Hilux bakkie, will cost an extra R41.25 versus last month.

According to the Automobile Association, the price of petrol in August will be around 23 percent higher than in January, while diesel would have risen by around 20%.

“The average Rand/US dollar exchange rate consistently trended upward during July and the weaker local currency will make it more expensive for South Africa to import fuel,” the AA said, also noting that international oil prices averaged at a higher level last month. Fuel taxes and levies such as the Road Accident Fund levy, which increase annually, are not helping the situation, accounting for R6.11 per litre of fuel.

 

Pain at the pumps for some

Source: The South African

The mid-month petrol price estimates for July were published on Tuesday, and they are the very definition of a mixed bag. Although some grades of fuel are seeing costs drop steadily, others are heading in the wrong direction.

Petrol prices are set for a decrease. Granted, that will only be by a few cents – as it was last month – but any movement in the right direction should be welcomed. According to the Central Energy Fund (CEF), six cents per-litre will be trimmed from the 95 grade of petrol, and 93 grade is getting three cents cheaper. Every little helps, right?

– Petrol 95 is expected to cost an average of R17.07p/l inland, and R16.41p/l by the coast.
– Petrol 93 is expected to cost an average of 16.88p/l inland, and R16.36p/l by the coast.

Both diesel and illuminating paraffin are likely to be more expensive in July, though. In total, costs for the fuel are predicted to rise by 19 cents. Meanwhile, there is a 14 cent increase on the cards for the aforementioned oil:

– Diesel (wholesale) is expected to cost an average of R14.85 – R14.90p/l inland, and R14.24p/l by the coast
– Illuminating paraffin (wholesale) is expected to cost an average of R8.91 across the country.

Things could have been much better for South Africa: After posting some very positive GDP data and seeing the Rand perform strongly against the US Dollar, there was a quiet confidence in some circles that the petrol price would take a significant tumble in July. But a mix of load shedding and COVID-19 infections effectively put paid to that.

Rolling blackouts have crippled a pandemic-weary country for the best part of two weeks, inhibiting businesses from performing at their peak at a time where every cent counts. According to the CEF, this has taken a substantial toll on the forecast fuel costs for the month ahead – and it’s another thing fine mess we can pin on Eskom.

 

Source: BBC

The price of US oil has turned negative for the first time in history.

That means oil producers are paying buyers to take the commodity off their hands over fears that storage capacity could run out in May.

Demand for oil has all but dried up as lockdowns across the world have kept people inside.

As a result, oil firms have resorted to renting tankers to store the surplus supply and that has forced the price of US oil into negative territory.

The price of a barrel of West Texas Intermediate (WTI), the benchmark for US oil, fell as low as minus $37.63 a barrel.

“This is off-the-charts wacky,” said Stewart Glickman, an energy equity analyst at CFRA Research. “The demand shock was so massive that it’s overwhelmed anything that people could have expected.”

The severe drop on Monday was driven in part by a technicality of the global oil market. Oil is traded on its future price and May futures contracts are due to expire on Tuesday. Traders were keen to offload those holdings to avoid having to take delivery of the oil and incur storage costs.

June prices for WTI were also down, but trading at above $20 per barrel. Meanwhile, Brent Crude – the benchmark used by Europe and the rest of the world, which is already trading based on June contracts – was also weaker, down 8.9% at less than $26 a barrel.

Mr Glickman said the historic reversal in pricing was a reminder of the strains facing the oil market and warned that June prices could also fall, if lockdowns remain in place. “I’m really not optimistic about the prospects for oil companies or oil prices,” he said.

OGUK, the business lobby for the UK’s offshore oil and gas sector, said the negative price of US oil would affect firms operating in the North Sea.

“The dynamics of this US market are different from those directly driving UK produced Brent but we will not escape the impact,” said OGUK boss Deirdre Michie.

“Ours is not just a trading market; every penny lost spells more uncertainty over jobs,” she said.

The oil industry has been struggling with both tumbling demand and in-fighting among producers about reducing output.

Earlier this month, Opec members and its allies finally agreed a record deal to slash global output by about 10%. The deal was the largest cut in oil production ever to have been agreed.

But many analysts say the cuts were not big enough to make a difference.

“It hasn’t taken long for the market to recognise that the Opec+ deal will not, in its present form, be enough to balance oil markets,” said Stephen Innes, chief global market strategist at Axicorp.

The leading exporters – Opec and allies such as Russia – have already agreed to cut production by a record amount.

In the United States and elsewhere, oil-producing businesses have made commercial decisions to cut output. But still the world has more crude oil than it can use.

And it’s not just about whether we can use it. It’s also about whether we can store it until the lockdowns are eased enough to generate some additional demand for oil products.

Capacity is filling fast on land and at sea. As that process continues it’s likely to bear down further on prices.

It will take a recovery in demand to really turn the market round and that will depend on how the health crisis unfolds.

There will be further supply cuts as private sector producers respond to the low prices, but it’s hard to see that being on a sufficient scale to have a fundamental impact on the market.

For US drivers, the decline in oil prices – which have fallen by about two-thirds since the start of the year – has had an impact at the pumps, albeit not as dramatic as Monday’s decline might suggest.

“The silver lining is, if you for various reason actually need to be on the roads, you’re filling up for far less than you would have been even four months ago,” Mr Glickman said. “The problem for most of us is even if you could fill up, where are you going to go?”

US President Donald Trump has said the government will buy oil for the country’s national reserve. But concern continues to mount that storage facilities in the US will run out of capacity, with stockpiles at Cushing, the main delivery point in the US for oil, rising almost 50% since the start of March, according to ANZ Bank.

Mr Innes said: “It’s a dump at all cost as no one, and I mean no one, wants delivery of oil with Cushing storage facilities filling by the minute.”

By Tom Head for The South African

For the third month in a row, the petrol price has decreased in South Africa. March will see the following substantial changes to fuel costs.

A substantial drop for both the diesel and petrol price in South Africa has put our motorists in a good mood at the start of March.

Confirmed petrol price for March 2020
Petrol getting cheaper, but so is diesel and illuminating paraffin:

  • Petrol: Decrease of 19 cents per litre
  • Diesel: Decrease of 54 cents per litre
  • Paraffin:Decrease of 68 cents per litre

Subtracting these totals from February’s fuel price gives us the following average cost-per-litre for petrol and diesel. These prices will take effect from Wednesday 4 March:

  • Inland petrol price – R15.84
  • Coastal petrol price – R15.07
  • Inland diesel price – R13.49
  • Coastal diesel price – R14.03

Why is the petrol price dropping in March?
There are, as ever, two major factors at play. However, it’s the global oil price trends that have accounted for this slashing of fuel costs. The outbreak of the coronavirus has left international markets spooked, and the demand for oil has subsided. The decrease would have been more, if not for the Rand’s weak monthly performance against the US dollar. Despite a brief rally this week, ZAR is still floundering.
The honeymoon period is unlikely to last through to April, however. It was announced during February’s budget speech that taxes on fuel would be rising, making petrol prices more expensive.

Saudi oil attacks cause price wobble

Source: CNN

Investigators from Saudi Arabia and the United States of America have determined “with very high probability” that the weekend attack on the Saudi oil industry was launched from an Iranian base in Iran close to the border with Iraq.

What happened?
Ten drones performed co-ordinated strikes on key Saudi Arabian oil facilities knocked out half of the country’s oil capacity — more than 5-million barrels a day. This amounts to about 5% of the world’s supply. Saudi and US investigators have determined “with very high probability” that the attack came from an Iranian base, according to a source.

Who’s behind this?
Yemen’s Houthi rebels said they’re responsible for the attacks, but a spokesperson for the Saudi-led coalition in Yemen said that Iranian weapons were used in the oil field attack.

Where the US stands
President Trump said it looks like Iran was behind the attack but suggested it was too early to say for sure. Trump also insisted that he does not want war with Iran.

How it’s affecting oil
On Monday, US oil prices spiked by more than 14%. It was the biggest spike since January 2009.
Oil prices dropped sharply Tuesday, following Monday’s surge that sent shock waves around the world.

US oil futures dropped 4.6% to $59.98 per barrel, following a Reuters report that Saudi Arabian oil production would return to normal within two to three weeks. Investors took that as a positive sign about the impact of the weekend’s attacks on global oil supply.

Brent crude, the international benchmark, is down 5.8% at $64.99 a barrel.

How it could affect South Africans
According to Fin24, a strong rand rally over the past week put the petrol price on track for a cut in the first week of October. This would mean petrol price cuts of between 11c an 24c a litre.

The Automobile Association spokesperson Layton Beard says the massive increase in the global oil price will likely cancel out the forecast price cut.

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