Motorists can expect another significant fuel price drop in September, with petrol prices expected to decrease between 55c and 64c a litre.

The Automobile Association (AA) said on Monday the sharp depreciation of the rand against the US dollar has been offset by the ongoing decline in international petroleum prices. “The rand has weakened considerably against the US dollar since the last week of July,” the AA said.

“Fortunately for South African fuel users, international oil prices have continued to slip, meaning there is still a reasonable prospect of a drop in the fuel price at the end of the month.”

On Monday afternoon the rand traded at R12.91 against the US dollar, while Brent North Sea crude for October was unchanged at $49.03 a barrel.

“The combination of elevated stockpiles in the US and increasing production from OPEC, sluggish demand growth, and a stronger US (dollar) would continue to pressure oil prices,” Bernard Aw, market strategist at IG Markets, told AFP.

The AA said without the impact of the exchange rate’s recent poor showing, the predicted drop in the petrol price would have been in a range of 75c to 83c a litre.

The AA expects diesel to drop by between 53c and 57c a litre, and illuminating paraffin by 60c a litre.

“While a slight levelling off has become apparent in the downward trend of international petroleum prices, we are confident that fuel prices will drop at the end of August. “However, if oil prices flatten out, motorists will be at the whim of the rand in coming months,” the AA said. – Fin24

Source: News 24 wire