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Fuel price could be cut by about 25c

by Michael Appel
on 24 Jul 2008
BuaNews Online
BuaNews Online

South African motorists might be able to breathe a little easier from next month as the price of petrol and diesel is set to decline by about 25 cents and 15 cents respectively.

Speaking to BuaNews on Thursday, economic strategist from Econometrix Treasury Management (ETM), Russell Lamberti, said: "We expect a cut of about 25 to 30 cents for petrol, and about 15 cents cut in the price of diesel.

Mr Lamberti highlighted that as the housing market continued to play havoc with the United States and European markets, growth had slowed and the high demand for crude oil had dwindled slightly.

When the price of oil per barrel dropped from $145 to $135, it was a technical level to break with the $125 mark soon to follow, he said.

"We might see oil prices go to the $112 or $115 level.

"[However], supply side risks are still prevalent, demand growth out of Asia is still strong ... and non-Organisation of the Petroleum Exporting Countries [OPEC] has slowed production," Mr Lamberti told BuaNews.

While demand in the US and Europe may have slowed, it is unlikely to be enough to off-set the increasing demand for oil from Asia, Mr Lamberti said, adding China's economy was still growing at about 8 percent.

Political developments in Iran has also not had such a major impact on markets as was first anticipated, as the US has sought to deal with Iran's nuclear issue diplomatically.

Economist at Investment Solutions, Isaac Matshego told BuaNews they expect an over recovery of about 26 cents for petrol.

"There are a number of factors that had an impact on the oil price decreasing including the fact that the high price of oil, as witnessed recently, would impact negatively on inflation and economic growth globally.

"We've seen the price of oil come off about 10 percent since the beginning of the month and oil is currently sitting at $126.50 per barrel.

"This is a good move and should result in at least a minimum petrol price cut of 15 cents," concluded Mr Matshego. - BuaNews


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