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July, 2018 3:10 PM



Biggest yearly lift in petrol price in 9.5 yrs

Biggest yearly lift in petrol price in 9.5 yrs

According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 1.0 cent to 149.8 cents a litre in the past week.

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03.07.2018 12:24 PM

Biggest annual increase in petrol prices in 9½ years
Weekly Petrol prices

Petrol: According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 1.0 cent to 149.8 cents a litre in the past week. Still, the annual increase in petrol prices to July 1 stands at 24.8 per cent – the strongest growth rate in 9½ years.

Crude oil price surges: Last week Brent crude oil rose by 5.1 per cent to US$79.44 a barrel and the US Nymex rose by 8.1 per cent to US$74.15 a barrel – the highest level in 3½ years. And the key Singapore gasoline benchmark price rose by US$3.55 or 4.4 per cent to US$84.00 a barrel.

What does it all mean?

Petrol prices are down across most of the country. Perfect timing with the school holidays commencing today. Why? According to independent online motoring research company, MotorMouth, the retail petrol price discounting cycle is still in operation - into its 15th day in Adelaide and 13th day in Sydney. Still, pump prices remain persistently high elsewhere, stretching household budgets.

Sydney and Adelaide motorists are well advised to fill-up their cars now as pump prices are expected to rise in around a week. Global crude oil prices surged to their highest level in 3½ years last week. The Brent crude oil price rose by 5.1 per cent to US$79.44 a barrel and the US Nymex rose by 8.1 per cent to US$74.15 a barrel.

And the key Singapore gasoline price rose by 4.4 per cent to US$84.00 a barrel last week, signalling a likely rise in Aussie pump prices once the current petrol price discount cycle ends in capital cities.

Politicians globally are becoming uneasy about their electoral prospects with higher fuel prices dampening consumer spending and lifting input costs for businesses. With the US celebrating its July Fourth holiday this week, the peak summer driving season underway, and US gasoline near 4-year highs at US$3 a gallon, US President Donald Trump requested that Saudi Arabia increase its oil production by “maybe up to 2 million barrels [per day]” in a tweet on Saturday.

And it appears that OPEC and Russia’s week-old agreement to boost crude oil production is already in jeopardy. Iranian Oil Minister Bijan Namdar Zanganeh has called on OPEC to reject US President Trump’s call for a production increase that is “politically motivated against Iran” (given likely US sanctions). An increase in any nation’s output beyond limits that OPEC set in 2016 would breach the agreement, he said.

Down here in Australia the gross average diesel retail margin (smoothed) has increased to $15.83 – the highest level since September last year. Those with a diesel vehicle will be feeling the pain.

What do the figures show?
Petrol prices

According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 1.0 cent to 149.8 cents a litre in the past week. Still, the annual increase in prices stands at 24.8 per cent – the strongest growth rate in 9½ years.

The metropolitan petrol price fell by 1.4 cents to 148.9 cents per litre and the regional price fell by 0.1 cents to 151.7 cents per litre. The gross retail margin rose by 0.6 cents to 15.00 cents – the highest level in five months.

Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 8.2 cents to 144.8 c/l), Melbourne (up by 0.3 cents to 152.7 c/l), Brisbane (up by 11.8 cents to 156.4 c/l), Adelaide (down by 17.8 cents to 131.4 c/l), Perth (down by 1.0 cents to 146.8 c/l), Darwin (up by 0.2 cents to 156.0 c/l), Canberra (flat at 155.0c/l) and Hobart (up by 2.0 cents to 158.1c/l).

Today, the national average wholesale (terminal gate) unleaded petrol price stands at a 131.9 cents a litre, down by 1.2 cents over the week. The terminal gate diesel price stands at 136.1 cents a litre, down by 0.5 cents over the past week.

The national average diesel petrol price fell by 0.1 cents to 154.1 cents a litre over the week. The metropolitan price fell by 0.1 cents to 154.8 cents a litre with the regional price down 0.2 cents to 153.5 cents a litre.

Last week the key Singapore gasoline price rose by US$3.55 or 4.4 per cent to US$84.00 a barrel. In Australian dollar terms, the Singapore gasoline price increased by $4.91 or 4.5 per cent last week to $113.65 a barrel or 71.48 cents a litre.

MotorMouth records the following average retail prices for capital cities today: Sydney 139.8c; Melbourne 148.7c; Brisbane 152.8c; Adelaide 129.6c; Perth 136.2c; Canberra 155.0c; Darwin 156.1c; Hobart 158.1c.

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?

Pump prices eased a little last week. But declines were confined to Adelaide, Sydney and Perth. Melbourne prices were flat. Household budgets are under significant pressure from rising fuel prices in Brisbane, Canberra, Darwin and Hobart with pump prices in excess of $1.55 a litre. The annual growth rate of retail petrol prices is the highest in almost a decade.

While the unleaded petrol price discount cycle is aiding motorists in Sydney, Adelaide and Melbourne, now is the time to fill-up. Global crude oil prices are surging.

But diesel prices are much higher than unleaded prices, particularly in regional areas. Farmers in western regions, already contending with severe drought conditions, are also faced with rising fuel costs. It’s not getting any easier for our country cousins. And rising raw material input costs are likely to increase broader inflationary pressures.

CommSec expects official interest rates to be stable until early 2019. But inflation and wage data will be closely observed in the coming months.

Published by Ryan Felsman, Senior Economist, CommSec
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