Petrol price falls; OPEC to dominate focus
Weekly petrol prices
Retail petrol: According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 1 cent to 123.1 cents a litre in the week to November 20.
Motorists will need to keep pressure on retailers to pass on savings at the petrol pump. The gross retail margin of 16.5 cents a litre (last week) was the highest in five months and just shy of record highs. By comparison the average margin was 12.0 cents over the past year and the 5-year average was just over 10 cents a litre.
In Australian dollar terms the Singapore gasoline price rose from a 9-week low, up by $1.92 a barrel or 2.5 per cent to $77.90 a barrel or 48.99 cents a litre.
MotorMouth records the following retail prices for capital cities today: Sydney 110.5c; Melbourne 129.0c; Brisbane 126.2c; Adelaide 108.4c; Perth 117.6c; Canberra 128.6c; Darwin 129.2c; Hobart 126.1c
What does it all mean?
Petrol prices eased over the past week, and the good news for motorists is that even lower pump prices are likely over the near term. The key Singapore gasoline price may have risen by almost $2 over the past week, but it was down by almost $8 in the prior fortnight. And those early price falls will still be filtering through to petrol prices. In addition the gross retail margin has surged to 16.5 cents – the highest reading in five months and not far off record highs. The result suggests that petrol retailers have scope to ease prices in coming weeks.
Unfortunately, the recent slide in the Australian dollar may limit the fall in pump prices, but what is clear is that cheap fuel is here to stay. A year ago the national average petrol price was $1.28 a litre. Today, it stands at $1.23 a litre.
Traders remain sceptical that major oil producers will crimp production at the upcoming OPEC meeting (November 30). And even if production quotas are cut, the question remains whether individual producing nations will actually enforce the production cuts. While pump prices will be volatile over the next months, it looks likely that motorists will enjoy cheap petrol over the next fortnight, edging lower by around another 2 cents a litre.
Petrol is the single biggest weekly purchase that most families make. So petrol has a big impact on retail spending, particularly in the lead up to Christmas. Certainly the vagaries of the discounting cycle has resulted in vast differences in prices across the nation. Average Melbourne pump prices rose by over 11 cents a litre last week. In contrast Sydney prices fell by around 8 cents a litre with Adelaide prices down by a larger 14 cents a litre.
What do the figures show?
According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 1 cent to 123.1 cents a litre in the past week. The metropolitan petrol price fell by 1.1 cents to 122.2 cents per litre while the regional price fell by 0.8 cents to 124.9 cents per litre.
Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 8.3 cents to 113.7 c/l), Melbourne (up 11.8 cents to 126.2 c/l), Brisbane (down by 4.7 cents to 128.9 c/l), Adelaide (down 14.5 cents to 115.0 c/l), Perth (down by 0.4 cents to 123.1 c/l), Darwin (flat at 129.3 c/l), Canberra (down by 0.2 cents to 128.8 c/l) and Hobart (up by 0.4 cents to 125.6 c/l).
The national average Australian price of diesel petrol was down by 0.2 cents to 123 cents per litre in the week to November 20. The metropolitan price fell by 0.1 cents to 123.2 c/l, while the regional average price was down by 0.2 cents to 122.9 c/l.
Today the national average wholesale (terminal gate) unleaded petrol price stands at 106.2 cents a litre, down by 0.4 cents a litre over the week. The terminal gate diesel price stands at 104.7 cents a litre, down by 0.2 cents a litre over the previous week.
The gross retail margin (difference between pump price and terminal gate price) rose from 11.8 cents to 16.5 cents last week.
Last week the key Singapore gasoline price fell by US30 cents or 0.5 per cent to US$57.60 a barrel. In Australian dollar terms the Singapore gasoline price rose from a 9-week low, up by $1.92 a barrel or 2.5 per cent to $77.90 a barrel or 48.99 cents a litre.
MotorMouth records the following retail prices for capital cities today: Sydney 110.5c; Melbourne 129.0c; Brisbane 126.2c; Adelaide 108.4c; Perth 117.6c; Canberra 128.6c; Darwin 129.2c; Hobart 126.1c.
What is the importance of the economic data?
Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
What are the implications for interest rates and investors?
Petrol prices are poised to ease albeit modestly in coming weeks, lifting consumer spending power in the all important lead-up to Christmas.
Filling up the car with petrol is the single biggest weekly purchase for most families. Over the past year savings being reaped at the petrol bowser have served to boost discretionary spending in areas such as cafes, restaurants and take-away outlets.
CommSec expects no change to interest rates in the foreseeable future.
Published by Savanth Sebastian, Economist, CommSec
Extracted from The Bull