Ongoing oil price weakness has been bolstered by a strengthening in the Rand / US dollar exchange rate. This according to the Automobile Association (AA) which was commenting on unaudited mid-month fuel price data released by the Central Energy Fund (CEF).

“The Rand has recouped some of its losses against the dollar and traded in a fairly narrow band since the end of January,” the AA commented. “This is allowing South Africans to benefit from lower international petroleum prices and provides some cushioning against any upward movement.”

Petrol users are in for much-needed relief; the current indicators show a decrease of between 56 and 59 cents a litre, with around 11 cents attributable to gains in the Rand. Although the international price of diesel climbed slightly in the first half of February, the exchange rate offset some of the gains. Without the stronger exchange rate; the increase would have been 17 cents a litre instead of the seven cents a litre currently predicted.

Illuminating paraffin is set for an increase of ten cents a litre, which would have been 20 cents without the Rand’s recent gains.

“Although the fuel price is still regulated by the government, the industry is not performing optimally, mainly due to the fact that a number of items are being imported at high cost, when they could in fact be manufactured locally. In order to produce locally, however, there is a need for capital investment in facilities upgrades. Government, in turn, needs to create an environment conducive to recovering these investments, but it is also tied with other social priorities like building houses,” comments Afric Oil CEO Tseke Nkadimeng.