Fuel Price Cut on September 2008

Some relief is on the way. Fuel prices will drop for a second consecutive month at midnight tonight. The Minerals and Energy Department made the announcement last Friday that the retail price of petrol will drop by between 69 and 78 cents per litre. The wholesale price of diesel with 0.05% sulphur content will drop by R1.44 per litre. Diesel with 0.005% sulphur content would drop by R1.46 per litre. This comes as a huge relief to consumers who had been battling with the increased fuel prices a couple of months ago.

The wholesale price of illuminating paraffin will drop by R1.46 a litre and the single maximum national retail price for illuminating paraffin by R1.94 a litre. This is also much welcome for consumers of paraffin who were not happy that the price of paraffin did not drop when the petrol and diesel prices last dropped.

It is now a matter of waiting to see if the fuel prices continue to drop. The drop has been attributed to the strengthening rand and the softening world oil prices. But with the hurricane season approaching it will be interesting to see how oil prices react. We may see oil prices rising due to decreased supply because of the hurricanes.

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Oil Prices Rise as Gustav Shuts Gulf Installations

World oil prices rose by less than one dollar in Asian trade today after the Hurricane Gustav forced the shutdown of almost all oil production in the Gulf of Mexico, said analysts.

New York's main contract, light sweet crude for delivery in October, rose 84 cents to USD 116.30 a barrel when trading closed Friday at the New York Mercantile Exchange.

Brent North Sea crude for October gained 72 cents to USD 114.77 from USD 114.05 in London on Friday.

About one quarter of the US oil production comes from the Gulf, one of the largest energy production hubs in the Americas, but the US officials said that more than 96% of Gulf oil production and 82% of the natural gas output had been stopped due to the storm.

Gustav was on target to plough into coastal Louisiana today, potentially as a Category 4 storm with sustained winds of 242 kilometres per hour and storm surges up to 4.8 metres above normal.

"It's all about Gustav," said Tony Nunan, of Mitsubishi Corp's international petroleum business in Tokyo.

He said that price gains had been limited because of underlying worries about a global economic slowdown and falling demand for oil.

World oil prices have sunk from record highs above USD 147 a barrel in early July after surging from USD 100 at the start of the year.

Today's rise of about one dollar was "not really that much", Nunan said, adding that trading would be thin because the US markets were shut for the Labour Day holiday.

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