According to Xinhua News report on Jan. 22, China will adjust the prices of refined oil products from Jan. 25. This will be the last adjustment before the Spring Festival of 2017. As crude oil prices in the international market have been declining under various pressures, the prices of refined oil products in domestic market is likely to move down slightly after four hikes at the beginning of the year.
Jan. 20 was the sixth working day in this round of pricing cycle for gasoline and diesel. A great number of institutions expect that the price of refined oil products will fall. Hu Huichun, an analyst at Sublime China Information Group, believes that as the implementation of the deal on the oil production cut remains unclear and the US dollar fluctuates at highs, there is no enough motivation for a hike in oil prices. In the next pricing cycle, crude oil prices in the European and US markets may maintain high, and is likely to fall. Meanwhile, a two-straight-day decline in crude prices will drag down the average price for the next pricing cycle. It is expected that in the next pricing cycle, the change rate of crude prices re-calculated based on a basket of references will fluctuate in a negative zone. The retail prices of refined oil products in domestic market are very likely to drop.
Data from chem365.net shows that as of Jan. 20 (Beijing time), it estimates that the change rate of crude prices is -0.65 percent. Chem365 crude oil is estimated at 54.9 US dollars per barrel, down by 0.36 US dollars from the benchmark price; while the Asia crude oil is estimated at 54.379 US dollars per barrel, down by 0.440 US dollars from the benchmark price. Chem365.net analyzes that the retail prices of refined oi products may at most fall 50 yuan per ton.
According to JLC Information, on the fifth working day as of Jan. 19, the average price of reference crude oil is 53.92 US dollars per barrel, marking a change rate of -0.64 percent. Correspondingly, the retail prices of gasoline and diesel should cut 30 yuan per ton. Entering the next week, the international crude oil prices may drop, yet in a narrow range, which will bring a very limited impact to the change rage. This round of price cut then is likely to come to an end.
JLC Information analyst Wang Jing believes that although major oil producers’ active moves in output production and the downward trend of the US dollar propped up oil prices, disappointing data from China Customs arise the market’s concern over a slowdown of China’s economy. Market expects that Russia may increase product after the production cut deal expires. The shale oil production in the US is growing. Both of these bring a pessimistic outlook, putting more downward pressure on oil prices. On the whole, compared with last week, oil prices in the international market declines at a faster pace. It is expected that the international oil prices will continue to fluctuate. Mainstream prices will fall to about 51-54 US dollars per barrel.
The price of refined oil products in the domestic market has shown a downward trend. Only that in Shandong strengthened. Particularly, amid the fluctuations of international oil prices, the market sees a thicker wait-and-see mood. As downstream users have shut down for the Spring Festival holidays, demands for diesel will decline further, which can hardly support a rise in price.
During the Spring Festival holiday, China’s expressway will take traffic restrictions. Customers who travel far to refineries in other provinces purchase refined oil will decline remarkably. Therefore, most refineries will continue shipment actively and control inventory levels. There is still high preferential price for actual shipment. On the whole, this week will be a gold period for stocking before the Spring Festival holiday. Major and local refineries are striving to sell more via promotions. There are lots of purchasing and sales activities across the country.
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