According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 0.5 cents to 130.1 cents a litre in the past week.

Petrol discounting cycle: Petrol prices in Sydney have fallen for 5 consecutive weeks and are now holding at around $1.15 a litre – just shy of wholesale prices. Melbourne prices peaked a fortnight ago but have only eased modestly to around $1.31 a litre. Similarly in in Brisbane and Adelaide, prices are closer to $1.35 and a $1.30 respectively. The petrol figures have implications for retailers, especially petrol marketing groups.

What does it all mean?

Over the past four months the average petrol price has held between $1.25 and $1.35. Prices look set to hold in the range for a while yet as investors monitor the global supply/demand outlook. OPEC countries for the most part have complied with the oil production cuts, but this has been partially offset by a lift in US shale oil production.

The number of oil rigs operating in the US rose for the 10th straight week. In addition US oil inventories rose by 5 million barrels last week far exceeding expectations. The net result is that the Singapore gasoline price remains close to recent 4-month lows in Australian dollar terms. More importantly the national average wholesale (terminal gate) unleaded petrol price has fallen 10.2 cents a litre from recent highs – suggesting cheaper petrol in coming weeks.

Motorists should also keep a close watch on the petrol discounting cycle. After falling for 36 days, petrol prices in Sydney are holding at around $1.15 a litre – just shy of wholesale prices. Melbourne prices peaked a fortnight ago but have only eased modestly to around $1.31 a litre. Similarly in in Brisbane and Adelaide, prices are closer to $1.35 and a $1.30 respectively.

CBA report 27.3

What do the figures show?

Petrol prices

According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 0.5 cents to 130.1 cents a litre in the past week. The metropolitan petrol price fell by 0.2 cents to 129.6 cents per litre while the regional price fell by 1.1 cents to 131.1 cents per litre.

Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 3.6 cents to 116.6 c/l), Melbourne (down by 3.3 cents to 133.9 c/l), Brisbane (up by 2.8 cents to 137.3 c/l), Adelaide (up by 15 cents to 134.2 c/l), Perth (down by 1.7 cents to 127.9 c/l), Darwin (down by 2.2 cents to 136.0 c/l), Canberra (down by 0.7 cents to 138.7 c/l) and Hobart (down by 0.1 cents to 142.1 c/l).

The national average Australian price of diesel petrol fell by 0.5 cents to 129.6 cents per litre in the week to March 26. The metropolitan price fell 0.6 cents to 129.8 c/l, while the regional average price fell 0.4 cents to 129.5 c/l.

The national average wholesale (terminal gate) unleaded petrol price stands at 111.5 cents a litre, down by 1.5 cents a litre over the week. The wholesale price has fallen 10.2 cents a litre from recent highs. The terminal gate diesel price stands at 110.1 cents a litre, down by 1.7 cents a litre over the previous week.

Last week the key Singapore gasoline price rose from 3-month lows, up by US20 cents or 0.3 per cent to US$63 a barrel. In Australian dollar terms the Singapore gasoline price rose from four-month lows, up by $1.02 a barrel or 1.3 per cent to $82.70 a barrel or 52.01 cents a litre.

MotorMouth records the following retail prices for capital cities today: Sydney 115.0c; Melbourne 131.7c; Brisbane 135.5c; Adelaide 129.6c; Perth 121.5c; Canberra 137.8c; Darwin 132.6c; Hobart 1417.9c.

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?

The petrol price is set to move in the right direction for motorists, and in turn, retailers. World crude prices are near 3-month lows, while wholesale prices continue to fall. The extra dollars saved at the petrol pump may serve to boost revenues of discretionary retailers.

CommSec expects no change to official cash rates in the foreseeable future.

Originally published by Savanth Sebastian, Senior Economist, CommSec.

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