East Coast petrol prices hiked to $1.60 a litre
Petrol Prices; Used vehicle market

Fuel prices: Last week the national average price of unleaded petrol fell by 3.1 cents a litre to 128.9 cents per litre (c/l) according to the Australian Institute of Petroleum.

East Coast pump prices: Unleaded retail petrol prices in Brisbane, Sydney and Melbourne are averaging $1.23-$1.29 a litre today (source: MotorMouth) – all in the early stages of a price hike. Fuel prices have hit 12-month highs of 159.9 cents a litre in some suburbs of Brisbane.

Used car prices: According to the Datium Insights, used vehicle prices rose 2.4 per cent last week.

Movements in the petrol price can affect consumer spending, and in turn, prospects for retailers. Used car price data is useful in gauging activity levels in the motor vehicle market.

What does it all mean?

• Brisbane motorists beware! Servos have begun hiking unleaded petrol prices. Prices have soared to 159.9 cents a litre today (source: MotorMouth) at multiple service station clusters around the city, including Brisbane’s inner northern suburbs (Fortitude Valley to Eagle Farm), inner western suburbs (Kenmore to Milton) and around the North Lakes (Kallangur to Deception Bay). But with pump prices still at $1.18 a litre or less elsewhere (especially in Brisbane’s Southside), motorists should fill up now before the price hikes spread.

• Sydneysiders driving into work today will have also noticed that unleaded fuel prices have jumped to between 139.9 to 147.9 cents a litre on the North Shore, Sutherland Shire, Inner West, Hills District and around Penrith. Prices could lift as high as a $1.60 a litre in the coming days, so motorists should consult their fuel apps and shop around for the best deals with some retailers still offering unleaded petrol at below $1.25 a litre.

• Despite a likely drop-off in demand for fuel due to Melbourne’s snap 5-day lockdown, petrol retailers in Morang have hiked average unleaded pump prices to as high as 146.7 cents a litre today. Prices are also averaging above $1.40 a litre in Ringwood. Melburnians heading to petrol stations to buy essential food items should also fill up if they can with the price hike cycle likely to be in full swing by next week.

• The global automobile market was in oversupply prior to the pandemic, but chip shortages have affected supply chains and vehicle supply into Australia. Cashed-up Aussie households – reluctant to catch public transport and keen for domestic road trips – have underpinned the recent recovery in new and used vehicle sales. The economic upswing has seen used car prices soared by 35 per cent in 2020, according to Moody’s research. And today, Datium Analytics reported that prices climbed 2.4 per cent last week with second hand utes – the Isuzu D-MAX and Toyota Hilux – most popular, with prices up by around 2 per cent.

What do you need to know?

Weekly petrol prices

• Last week the national average price of unleaded petrol fell by 3.1 cents a litre to 128.9 cents per litre (c/l) according to the Australian Institute of Petroleum. Metropolitan prices fell by 6.1 cents to 128.3 c/l but regional prices rose 3.0 cents to 130.2 c/l.

• Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 5.7 cents to 131.3 c/l), Melbourne (down by 6.5 cents to 131.7 c/l), Brisbane (down by 8.5 cents to 122.3 c/l), Adelaide (down by 17.5 cents to 120.0 c/l), Perth (up by 2.4 cents to 130.0 c/l), Darwin (up by 7.4 cents at 126.8 c/l), Canberra (up by 2.1 cents to 128.8 c/l) and Hobart (up 1.9 cents to 128.3 c/l).

• The smoothed gross retail margin (2-month rolling average) for unleaded petrol fell from 17.11 cents a litre to 16.30 cents per litre (24-month average: 15.33 cents a litre).

• The national average diesel petrol price rose by 1.7 cents to 126.4 cents a litre over the past week. The metropolitan price lifted 1.7 cents to 125.6 cents a litre and the regional price was up 1.7 cents to 127.1 cents a litre.

• Last week, the national average unleaded Terminal Gate Price (TGP) was up 3.1 cents to 116.6 cents a litre. The terminal gate diesel price was up 3.4 cents to 116.2 cents a litre.

• Today, the average unleaded TGP stands at an 11-month high of 117.8 cents a litre, up by 2.8 cents over the week. The terminal gate diesel price has also hit an 11-month high at 117.7 cents a litre, up 3.5 cents a litre over the week.

• MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 128.4c/l; Melbourne 129.1c/l; Brisbane 123.8c/l; Adelaide 145.7c/l; Perth 118.5c/l; Hobart 130.3c/l; Darwin 129.5c/l; and Canberra 129.7c/l.

• Last week the key Singapore gasoline price rose by US8 cents or 0.1 per cent to an 11-month high of US$65.50 a barrel. But in Australian dollar terms, the Singapore gasoline price fell by $1.59 or 1.8 per cent to $84.57 a barrel or 53.19 cents a litre.

Weekly used vehicle market

• Datium Insights have reported the following results for the past week:

• “Prices continued to increase last week (+2.4 per cent) with repossessions (+6.2 per cent) leading the increases.

• Supply was down (-12 per cent) with stock still below par.

• Clearance rates also fell (-7.8 per cent).

• Prices for the top 15 traded vehicles were mixed with the Isuzu D-MAX (+2.2 per cent) leading increases and the Hyundai iLoad seeing the greatest decrease (-4.9 per cent).

• Stock still remains considerably low.”

What is the importance of the economic data?

• Weekly petrol prices data 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 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.

• Data analytics firm, Datium Insights, provides a weekly report on the used vehicle market. Datium Insights and Moody’s Analytics also issue a monthly reading on used vehicle prices. The data assists in gauging the strength of a key component of consumer spending and provides insights on the Autos and components sector of the sharemarket.

What are the implications for investors?

• Aussie motorists will need to get used to higher petrol prices. Today, national wholesale unleaded petrol prices (Terminal Gate Prices) are at an 11-month high of 117.8 cents a litre and unleaded pump prices are back at pre-pandemic levels in some suburbs of Greater Brisbane.

• While pump prices rise and fall according to big city retail fuel cycles, Australia remains a net importer of refined fuel product with fluctuations in the Aussie dollar and global crude oil prices influencing prices at the bowser. This year Brent crude oil prices have surged 21 per cent to US$62.43 a barrel and the US Nymex price is up 23 per cent to US$59.47 a barrel – hitting 13-month highs – on hopes that US fiscal stimulus and vaccine rollouts will boost the world’s largest economy, driving up fuel demand. Last week, US crude stockpiles were at the lowest level since March 2020.

• Oil prices have also lifted as crude supplies tighten due to output cuts by OPEC+ producing countries. Yesterday, Russia’s deputy Prime Minister Alexander Novak said that global oil markets had decome broadly balanced after crude demand cratered during Covid-19 lockdowns with prices expected to average US$45-$60 a barrel in 2021. Commonwealth Bank (CBA) Group commodity strategists forecast Brent to finish the year at US$65 a barrel with the Nymex price at US$62 a barrel.

Published by Ryan Felsman, Senior Economist, CommSec