Fuel: July price cut may be the last

2012-06-21 00:00

MOTORISTS are set to receive a further boon next month, following indications that a substantial petrol price cut of about 60 cents a litre is in the offing.

The price of petrol was cut by 55 cents a litre on June 6.

This followed steep increases earlier this year — 34 cents a litre in February, 28 cents a litre in March, 66 cents a litre in April and 28 cents a litre in May.

The chief economist at Investment Solutions, Chris Hart, told The Witness that global crude oil prices continued to decline on the back of jitters about weaker global economic growth prospects.

Hart added that the rand had strengthened against the U.S. dollar in recent weeks, from about R8,60 to about R8,20 to the U.S. dollar.

The wholesale price of diesel is also expected to decline next month, but by a lower margin than the anticipated drop in the petrol price.

“Oil prices have dropped on indications that the global economy is weakening. The weaker numbers are coming from China, Europe, the U.S. and China, so it is more widespread than we would have liked,” Hart said.

However, he does not expect major reductions in fuel prices for the rest of the year, although much depends on the performance of the global economy.

“I think we should take this as a good month and leave it at that. There is a huge range of possibilities when it comes to the outlook for fuel prices.”

According to latest fuel price expectations, there is an over-recovery on the petrol price, which means consumers are paying too much for a fuel product on a given day.

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