Sydney petrol prices surge.

Sydney petrol prices surge; Used car prices lift

Record resources & energy export earnings

Weekly Petrol Prices; Used vehicle prices; Resources & energy exports

Fuel prices: According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 5 cents last week to 4-month lows of 115.2 cents a litre.

East Coast petrol prices: Daily unleaded retail petrol prices are averaging between 109.40 and 116.60 cents a litre today across our biggest cities – Sydney, Melbourne and Brisbane – according to real-time fuel app MotorMouth. But pump prices in parts of Sydney have surged to around 147.9 cents a litre as the discounting cycle ends.

Resources & energy exports: The Department of Industry, Science, Energy and Resources released the Resources & Energy Quarterly for September 2020. According to the Chief Economist, “Resources and energy exports are forecast at $256 billion in 2020/21 and $252 billion in 2021/22, down from a record $290 billion in 2019/20.”

Used vehicle prices: Data analytics firm, Datium Insights, provides a weekly report on the used vehicle market. In the week to September 25, used motor vehicle prices rose by 2.1 per cent after falling 1.2 per cent in the previous week.

Movements in the petrol price can affect consumer spending, and in turn, prospects for retailers.

What does it all mean?

• The average Aussie unleaded petrol price hit 4-month lows of 115.2 cents a litre last week, with East Coast pump prices hitting the cheapest phase of the fuel cycle. But motorists in Brisbane, Sydney and Melbourne should fill up their tanks as soon as possible. In fact, pump prices have already spiked in parts of Sydney. Today, unleaded petrol prices are as high as 148.9 cents a litre in Sydney’s northern, eastern, southern and inner western suburbs, according to real-time fuel app MotorMouth. Not ideal timing ahead of the October long weekend!

• And motorists in Adelaide haven’t been spared. Unleaded petrol prices have surged 35 cents a litre – on average – to around 135.2 cents a litre today, after hitting 4-month lows of 100.3 cents a litre on Friday. As always, motorists are encouraged to consult real-time fuel apps and shop around for the best fuel prices. As prices increase, drivers should top up rather than fill up their tanks as prices typically rise hard and fast at the end of discounting cycles.

• Australia’s export sector has been a pillar of strength during the pandemic recession. In fact, Aussie resources and energy export earnings hit record highs of $290.4 billion in fiscal year 2019/20, according to the Department of Industry, Science, Energy & Resources.

• So why are Aussie exports so strong? Prices of Australia’s largest export – iron ore – recently hit 6½-year highs of US$130.80 a tonne due to supply disruptions in Brazil and record steel production by Chinese mills as the world’s second largest economy boosted infrastructure spending. And gold export earnings are expected to hit record highs of $31 billion in 2020/21 on the back of recent record prices and shipment volumes – challenging LNG to become out third most valuable commodities export.

What do the reports and figures show?

Petrol prices

• According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 5 cents to 4-month lows of 115.2 cents a litre. The metropolitan price fell by 6.8 cents to 113.9 cents a litre and the regional price lost 1.2 cents to 117.9 cents a litre.

• Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 5.5 cents to 108.3 c/l), Melbourne (down by 6.7 cents to 120.1 c/l), Brisbane (down by 8.6 cents to 113.0 c/l), Adelaide (down by 20.5 cents to 104.7 c/l), Perth (up by 0.1 cent to 116.7 c/l), Darwin (steady at 117.6 c/l), Canberra (down by 0.6 cents to 121.4 c/l) and Hobart (down by 0.6 cents to 123.5 c/l).

• The smoothed gross retail margin (2-month rolling average) for unleaded petrol fell from 19.01 cents to 17.93 cents (24-month average: 14.8 cents a litre).

• The national average diesel petrol price fell by 0.3 cents to 119.2 cents a litre over the past week. The metropolitan price fell by 0.2 cents to 117.8 cents a litre and the regional price was down 0.4 cents to 120.3 cents a litre.

• Last week, the national average unleaded Terminal Gate Price (TGP) rose by 1.5 cents to 102.6 cents a litre. The terminal gate diesel price rose by 0.2 cents to 98.6 cents a litre.

• Today, the average unleaded TGP stands at 103.9 cents a litre, up 2.7 cents over the week. The terminal gate diesel price stands at 99.1 cents a litre, up 1.2 cents a litre over the week.

• MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 109.4c; Melbourne 116.6c; Brisbane 110.3c; Adelaide 135.2c; Perth 105.9c; Canberra 121.1c; Darwin 117.6c; Hobart 123.2c.

• Last week the key Singapore gasoline price fell by US$1.90 a barrel or 3.8 per cent to US$48.50 a barrel. In Australian dollar terms, the Singapore gasoline price fell by US17 cents or 0.2 per cent to $68.89 a barrel or 43.20 cents a litre.

Used vehicle market – Week ended September 25

• Data analytics firm, Datium Insights, provides a weekly report on the used vehicle market. In the week to September 25, used motor vehicle prices rose by 2.1 per cent after falling 1.2 per cent in the previous week.

• In the latest week supply fell by 10.4 per cent with prices of Light Commercials (+5.8 per cent) up most, followed by ex-Council (+5.4 per cent), ex-Government (+4.7 per cent) and Lease Company (+4.5 per cent) vehicles.

• By vehicle, Datium reported, “Prices for top 15 traded vehicles were mixed with the Isuzu D-MAX (+5.5 per cent) and Holden Commodore (+4.8 per cent) leading increases. But Toyota Hiace (-5.2 per cent), Nissan X-TRAIL (-2.3 per cent) and Toyota Kluger (-2.2 per cent) prices were all down.”

Resources & Energy Quarterly – September 2020

• The Department of Industry, Science, Energy and Resources released the Resources & Energy Quarterly for September 2020.

• According to the Chief Economist, “In the September quarter 2020, the Office of the Chief Economist’s (OCE) Resources and Energy Export Values Index was down 21 per cent from a year before; an 18.4 per cent fall in prices added to a 4.6 per cent volume decline. In the outlook period, low prices and Australian dollar gains will likely more than offset modest export volumes gains: exports are forecast at $256 billion in 2020/21 and $252 billion in 2021/22, down from a record $290 billion in 2019/20 – when a 3.9 per cent rise in volumes more than offset the impact of a 0.1 per cent fall in prices.”

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. 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?

• Global oil prices are under pressure. Concerns are mounting that a resurgence in virus cases in the Northern Hemisphere could see governments reintroduce lockdown measures and restrict travel, stifling crude demand. Russia’s Energy Minister Alexander Novak yesterday said that he is estimating global oil demand in 2020 will decline as much as 10 per cent from a year earlier.

• Oil traders are also fretting about rising supply due to an increase in Iraqi exports and lifting Libyan output. Last week, Brent crude prices fell by US$1.23 or 2.9 per cent to US$41.92 a barrel. And the US Nymex lost US86 cents or 2.1 per cent to US$40.25 a barrel.

• While international crude oil prices are the biggest influence over Aussie unleaded pump prices, motorists are still at the mercy of the regular and unpredictable retail fuel cycle – especially on Australia’s East Coast. But motorists heading off for school holidays in NSW are faced with petrol prices near $1.50 a litre after prices fell below $1 a litre in some Sydney suburbs last week. Motorists in Brisbane and Melbourne should fill up at affordable prices this week before prices spike.

• Aussie used car prices lifted last week. Demand for second hand cars remain firm during the pandemic with Aussies preferring to drive their own cars rather than catch public transport due to health concerns. In fact, supply of vehicles plunged 10.4 per cent last week with prices of light commercial vehicles up 5.8 per cent. The Isuzu D-Max was highly sought after with prices up 5.5 per cent. And Holden legend Peter Brock (“Brockie”) would be smiling with demand for second hand Commodores lifting, pushing prices up by 4.8 per cent last week.

Published by Ryan Felsman, Senior Economist, CommSec