Government on Friday announced a downward adjustment to the retail pump prices for petrol, diesel and illuminating paraffin with effect from Saturday February 14. The latest reduction is the second in space of three months. The fuel prices.
Retail pump prices for unleaded petrol 93 and 95 has been reduced by 104 and 103 thebe respectively, diesel at 107 thebe while illuminating paraffin went down by 65 thebe.
Meanwhile in the global markets, HYPERLINK “http://www.theguardian.com/environment/oil” Oil prices went above $60 a barrel for the first time this year amid signs that industry spending cuts might curb supply.
Brent crude collapsed 60% from a high of $115 a barrel last summer to $45.19 in January, the lowest in almost six years, as a result of oversupply.
Despite the rise on Friday, oil is still down by almost 50% compared with the peak in June.
Analysts at Bank of America Merrill Lynch are predicting Brent average prices will range between $40 and $70 a barrel in the next 18 months.
“A continued build in storage will likely further exacerbate near-term price volatility and keep pressing companies to make capital expenditure reduction decisions that will have long-lasting effects on production,” they wrote in a note.
Last month, the World Bank advised oil-importing developing countries including Botswana that the fall in oil prices provides them with a window of opportunity to undertake fiscal policy and structural reforms as well as fund social programs.??The World Bank is of the view that the developing world should advance economic growth by taking advantage of soft prices.
Crude oil prices have fallen in the recent times and a local asset management company said in a commentary recently that the move will have a positive impact on Botswana inflation going forward.
“The lower oil price has benefited consumers through a stable petrol price. The last time the government had to raise the retail prices of petrol, paraffin and illuminating paraffin was in 2012,” said Tshepiso Loeto of Investec Asset management Botswana.
He further noted that if the oil price stays stable at these levels, or even if it should rise by $10/barrel from the current levels, it will have a significantly positive effect on inflation. It would also allow the Petroleum Fund to build more reserves in order to keep the retail fuel pump prices constant.