South African consumers could see a 30 cents per litre cut in the retail petrol price in June as the recent decline in the daily over-recovery is not enough to wipe out the gains accumulated before the retail petrol price was adjusted on May 7.
The retail petrol price is adjusted monthly on the first Wednesday of the month in accordance with the previous averaging period’s over or under-recovery.
Data published on Wednesday showed that there was only a 15,483 c/l over- recovery in the unleaded petrol (ULP) price in South Africa on May 13, while for diesel 0,3% sulphur it was 20.506 c/l. On May 6 the over-recovery was a massive 70.76 c/l for ULP and 83.843 c/l for diesel.
The average over-recovery for the period April 28 to May 13 is nonetheless a high 49,978 c/l for ULP and 59,345 c/l for diesel 0,3% sulphur.
The April averaging period was for the period February 26 to March 25 and resulted in an average over-recovery of 7,992 c/l. This however did not result in a retail price drop of similar magnitude, as the government imposed various additional taxes at the beginning of their fiscal year, which is April 1. Consequently the retail petrol price rose by 5c/l instead of declining by 8c/l.
The average over-recovery for the period March 26 to April 25 was 49,438 c/l for petrol and 64,042 c/l for diesel 0,3% sulphur.
The retail petrol price on May 7 was only cut by 38 c/l, as 10c/l was put into the newly revived Equalisation Fund, 1c/l went to reduce the slate and the 0.438c/l was rounded down.
The value of the Organisation of Petroleum Exporting Countries’ (Opec) basket of seven crude oils averaged a five-month low of $23,27 a barrel on April 29, which represented a 29,7% decline since the recent peak of $33,11 reached on March 10.
Increasing tensions in the Middle East after the occupation of Iraq by the US has however seen a climb in the oil price in recent days and the oil price reached $25,41 a barrel on May 13.
Set in 1986, the basket is based on the average prices of Algerian Saharan Blend, Indonesian Minas, Nigerian Bonny Light, Saudi Arabian Arab Light, Dubai Fateh, Venezuelan Tia Juana Light and Mexican Isthmus crude oils.
Oil prices fell by some 30% since the start of the Iraq war on March 20 in April amid concerns that oversupply could flood the market in coming weeks. Opec called an emergency meeting for April 24 to discuss market conditions and supply issues. It reiterated its desire to keep its basket price within the target band of $22-$28/bbl.
At the meeting it said it would raise quotas, but nonetheless reduce supply by two million barrels per day. Widespread skepticism greeted this decision and most traders now expect the oil price to trade at the bottom end of the Opec range.
Under its price band mechanism, the group said it would raise output by 500 000 barrels a day if the basket price held above $28/bbl for 20 consecutive trading days, or lower output by 500 000 b/d if the basket price stayed below $22/bbl for 10 consecutive trading days. – I-Net Bridge