Africa-Press – South-Africa. The latest data from the Central Energy Fund (CEF) for the second week of December shows that fuel price recoveries have swung into positive territory across the board.
This is a reversal of the rocky start to the month when petrol prices were showing an under-recovery and pointing to a possible hike in January.
At the end of the second week, petrol price recoveries have turned positive, now showing an over-recovery of between 5 and 7 cents per litre.
The turn for fuel prices is remarkable, given that the data showed an under-recovery of 20 cents per litre just a week ago.
For diesel, which started the month with a strong over-recovery, this has only extended, with the fuel now showing an over-recovery of between 82 and 88 cents per litre.
Here are the recoveries at the end of the second week of December:
Petrol 93: decrease of 5 cents per litre
Petrol 95: decrease of 7 cents per litre
Diesel 0.05% (wholesale): decrease of 82 cents per litre
Diesel 0.005% (wholesale): decrease of 88 cents per litre
Illuminating paraffin: decrease of 57 cents per litre
Indicators at the start of the month are usually too early to make a decisive call on what the fuel price changes will be, which is evident in the big swing.
The start of the month reflected resilient but range-bound rand strength versus the dollar, and tensions between the US and Russia kept oil prices fixed around $65 a barrel.
In the week since, the rand has pulled back below R17 to the dollar, hitting its strongest levels since 2023, and the oil price has dropped to below $62 a barrel.
The rand strength, in particular, has fully countered the small under-recovery that is still present in the petrol prices due to global oil prices.
The favourable exchange is adding 12 cents per litre to an over-recovery.
Oil prices are lower, but still not as low as they were in previous months. For petrol, the movement in prices is still contributing to a 4-6 cents per litre under-recovery.
For diesel, due to the balancing of seasonal demand and other factors, the lower oil price is contributing to a significantly higher over-recovery, ranging from 71 to 76 cents per litre.
From zero to hero
After breaking below R17.00 at the start of the month, the South African rand has fluctuated around the resistance level.
It moved back above R17.00/$ as markets awaited fresh data, but has once again pulled below to hit around R16.84/$.
The gain was aided by the US Fed cutting rates in the United States by 25 basis points and a rally in the gold price.
As a major producer of precious metals, South Africa often benefits from firmer bullion prices. Markets will be looking ahead to consumer inflation numbers coming next week for the next signals.
Headline inflation is currently 3.6% in annual terms, and economists in a Reuters poll expect it to remain unchanged.
Analysts expect the rand to end the year on a strong note, with the potential to strengthen even further in 2026, thanks to a marked shift in risk sentiment.
Looking at oil prices, 2026 is also expected to bring a better turn for fuel pricing, with a supply glut anticipated to persist through 2027.
Oil prices have dropped by almost 20% this year due to a forecast of oversupply.
According to an analysis by Bloomberg, the International Energy Agency is predicting an unprecedented surplus in the new year, with global inventories expected to swell to a four-year high.
However, this is being countered by geopolitical tensions, most notably the ongoing war in Ukraine and the United States’ recent attacks on Venezuela.
US President Donald Trump announced new sanctions on three of Venezuelan counterpart Nicolas Maduro’s nephews, as well as six oil tankers, after the US seized a supertanker off the coast of the Latin American nation this week.
“The ship seizure was just the beginning of a new phase in the Trump administration’s ramped-up pressure campaign against the Venezuelan president, according to people familiar with the operation,” Bloomberg reported.
“The act of economic statecraft is designed to deny Maduro a lifeline of oil revenue and force him to relinquish power, the people said.”
While the Venezuela flare-up adds a headline risk premium to oil prices and market volatility, Bloomberg said it doesn’t change the bigger picture of oversupply.
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