The South African retail petrol price is likely to see a rise of some 20 cents per litre (c/l) on August 6.
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 Friday showed that there was a 14,165 c/l under-recovery in the unleaded petrol (ULP) price in South Africa on July 17, while for diesel 0,3% sulphur it was 2,539 c/l.
The average over-recovery for the period June 26 to July 17 is nonetheless 17,082 c/l for ULP and 7,468 c/l for diesel 0,3% sulphur.
The June averaging period was for the period May 26 to June 25 and resulted in an average under-recovery of 31,215 c/l.
This however did not result in a retail price rise of similar magnitude, as the government terminated the Equalisation Fund in June, which meant there was an additional 10c/l available to smooth the price rise. In addition, one cent per litre was subtracted because the cumulative slate balance owed to the oil companies had a positive balance. Consequently, the retail petrol price rose by only 20c/l at the beginning of July.
Oil prices have been rising recently as the market focused on persistently low US crude oil stock levels and supply disruptions.
Overall US crude oil stocks are some 10% lower than a year ago, prompting warnings that any supply disruptions could send prices spiking higher.
Petrol stocks are crucial now as the US driving season lasts until Labour Day at the beginning of September, which is one of the reasons why the petrol price will show a sharper increase than the diesel price in August.
The trading focus is starting to shift to distillates, which become key during the Northern Hemisphere winter. Analysts have been drawing comparisons with 2000 when a heating oil shortage helped to drive prices above $37 a barrel for US crude oil.
The price of Organisation of Petroleum Exporting Countries’ (Opec) reference basket has also been hovering around the top of the cartel’s target range of $22-$28 a barrel. The latest figure, for Thursday, was $27,93 a barrel for the basket, which is the average price of crude prices from seven nations.
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.
Opec ministers will meet in Vienna on July 31 to review the group’s production ceiling, which stands at 25,4 million barrels per day, excluding Iraq.
Analysts believe Opec is unlikely to change output limits, especially as there is continued uncertainty over when Iraqi exports will flow back to the market in bigger, sustained volumes given the ongoing sabotage of pipelines in that country.
Postwar Iraqi crude output is running at about 800 000 barrels per day (bpd), far below the roughly 2,5-million bpd before the start of the conflict in March to oust Saddam Hussein.
Officials had hoped to resume exports of one million bpd by mid-July, but sabotage of Iraq’s oil infrastructure has delayed that timetable. – I-Net Bridge