The global supply glut weighing on oil prices is starting to flow through to cheaper petrol for Aussie motorists.
According to research by Commsec senior economist Savanth Sebastian, the average petrol price across Australia has eased off of recent highs to be holding within a range of $1.25 and $1.35 per litre over the past four months.
“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,” Sebastian said.
He said the number of operational oil rigs in the US rose for the 10th straight week, while the latest US inventory measure far exceeded forecast estimates. The net result for Aussie drivers at the bowser is that Singapore gas prices are now at a four-month low in Australian dollar terms, as shown here:
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,” said Sebastian.
Petrol prices in Sydney have now fallen for five straight weeks and are currently holding at around $1.15, which is just shy of wholesale prices.
That’s cheaper than Melbourne, Brisbane and Adelaide, where the price is up around the $1.30 mark. With that in mind, Sydney drivers should keep an eye on the petrol discounting cycle.
This chart, showing 2017 petrol prices in Sydney, suggests they appear to be hitting a trough:
Looking ahead, Sebastian said that the petrol prices is set to head in the right direction for motorists and retailers. In addition to world crude prices trading near 2017 lows, wholesale prices continue to fall.
“The extra dollars saved at the petrol pump may serve to boost revenues of discretionary retailers,” he said.
This chart shows that the monthly spend on petrol per household in Australia has recently trended down from a 19-month high: