Craig James , 21 September 2015

The national average Australian price of petrol fell by 2.5 cents per litre to a 6-month low of 129.7 cents in the week to September 20.

In Australian dollar terms the Singapore gasoline price—a key benchmark for Australian petrol prices—fell by $1.16 a barrel, or 1.3%, last week to $90.51 a barrel, or 56.93 cents a litre.

Motorists continue to benefit from cheaper fuel prices despite the volatility in global oil markets and the Australian dollar.

The volatility in global oil prices has been nothing short of remarkable, driven by global growth concerns and the uncertainty about the timing of US interest rate hikes. The vagaries of the weekly discounting are also adding to the volatility.

In the past month the Singapore unleaded price has swung through a $10 a barrel range in Australian dollar terms. The national average petrol price is now holding at a fresh six-month low and, interestingly, the US Fed decision to keep interest rates on hold should help to support the Australian dollar and potentially add to further savings for motorists.

Melbourne petrol on the slide

Figures from MotorMouth show that petrol prices have been falling for two weeks in Melbourne and prices in Sydney and Brisbane have drifted lower for the past ten days.

Meanwhile, prices in Adelaide seem to have hit the high point (peak) in the last couple of days. Only Perth operates on a uniform weekly cycle. The bottom line is that Melbourne, Sydney and Brisbane motorists are enjoying fuel below cost while motorists in Adelaide would be better off waiting at least a week before filling up the family vehicle.

While the vagaries of the discounting cycle continues to be the key driver of such vast shifts in pump prices across the nation, capital city motorists can still benefit. The discounting cycle provides the best opportunity to purchase fuel at or below the cost (terminal gate) price – and in turn save a few extra dollars.

Between the peak and the trough in the cycle motorists could save themselves as much as 20 cents a litre. In major capital cities the best time to fill up the family vehicle may be in the next few days.

Average unleaded petrol prices across states and territories over the past week were:

  • Sydney (down 1.9 cents to 130.5 c/l)
  • Melbourne (down 8.4 cents to 126.6 c/l)
  • Brisbane (down 8.7 cents to 122.1 c/l)
  • Adelaide (up 9.7 cents to 132.9 c/l)
  • Perth (up 1.8 cents to 130.3 c/l)
  • Darwin (down 0.3 cents to 130.6 c/l)
  • Canberra (down 0.9 cents to 131.9 c/l)
  • Hobart (down by 0.3 cent to 137.2 c/l).

What are the implications for interest rates and investors?

Looking forward, while the magnitude of the shifts in petrol prices is uncertain, what is clear is that the volatility is here to stay. Improvements in the global economic outlook and the possibility of further stimulus from the world’s number one energy consumer, China, could add further to the upward momentum for oil prices.

Although we would expect that concerns about an ongoing supply glut and worries about global oil demand will continue to dominate sentiment and trade.

It is important to keep in mind that the Singapore gasoline price is still down around 25% from the highs in early June.

Overall the decline in world oil prices is a net positive for consumers and businesses across the globe. But the development is not without negative consequences. The speed of the fall in oil prices creates uncertainties for investors and businesses.

Extracted in full from Commonwealth Bank.