The latest data from the Central Energy Fund (CEF) for the end of the third week in March, shows that petrol prices could tip either way when they are adjusted next week.

Petrol prices continue to show flat adjustments, now tipping into a minor cut of between 1 and 3 cents per litre for April. Diesel and illuminating paraffin have cemented much larger price cuts, at around 65 cents and R1.23 per litre, respectively.

The swing into more positive territory is based on a stronger rand over the last week, combined with lower global oil prices.

However, both these factors remain volatile, economists warn.

The rand ended the week around R18.20 to the dollar, slightly weaker than the R18.07 hit after the United States Fed announced a 25bp rate hike. Despite weakening again – and sticking above the psychological R18.00 to the dollar mark – petrol prices are still showing an over-recovery.

According to Investec chief economist Annabel Bishop, the domestic currency is likely to remain volatile, however – with the Fed leaving the door open for further rate increases.

“The dot plot of members’ expectations shows one further 25bp lift, but markets are less certain, factoring in cuts this year,” she said. This will play into local market conditions as well, where most analysts and economists anticipate a 25bp hike in interest rates from the South African Reserve Bank this week.

While the rand is likely to remain volatile in the short term, economists at Nedbank are more optimistic about fuel prices over the longer term thanks to oil.

The bank said that fuel prices will benefit from lower Brent crude prices, which will be forced down by slower global demand, particularly in the major economies. This will also have a beneficial impact on local inflation, which has been sticky at higher levels.

Oil is currently trading around $76 a barrel, far lower than $84 a barrel recorded at the start of the month.

Oil prices have whipsawed in the first quarter of the year, but have remained below previous range-bound levels. At the start of March, prices started dropping below the $80-$90 range they had kept for the first two months of the year.

Accordin to Bloomberg analysis, oil extended a weekly gain on Friday (24 March) as investors braced for further volatility amid the fallout from the banking crisis rippling across various markets.

Despite the slight gains, however, oil markets remain on track for its steepest first-quarter loss since 2020 as a potential US recession, French strikes, and resilient Russian output weigh on the outlook.

“The rout might not be over just yet, with JPMorgan Chase & Co. forecasting Brent could break below $60 a barrel in the near term,” the group said.

As with the rand/dollar exchange and other currency markets, investors will be watching comments from US Fed officials and a key measure of US inflation this week for clues on the path forward for monetary policy amid the steepest tightening cycle in a generation.

Petrol price changes will come into effect on Wednesday, 5 April, with the Department of Mineral Resources and Energy expected to make an announcement on the official adjustments some time before then.