Nation follows global crude to cut fuel prices
By Pan Xiaoyi |
June 1, 2010, Tuesday
|
Print Edition
Print Edition
CHINA yesterday pruned fuel prices by more than 3 percent, the first cut in eight months.
The move reflects recent drops in global oil costs.
At Shanghai's pumps, the price for widely used 93-octane gasoline fell 2.47 percent to 6.7 yuan (98 US cents) a liter from 6.87 yuan.
The price of zero-grade diesel in Shanghai was down 2.8 percent to 6.58 yuan a liter from 6.77 yuan.
Retail prices will inevitably vary between regions.
Overall, the price of gasoline went down by 230 yuan to 7,190 yuan a ton, while the price of diesel fell 220 yuan to 6,460 yuan a ton, effective today, according to the National Development and Reform Commission, China's top economic planner.
This equates to a 3.1-percent decline for gasoline and a 3.29-percent drop for diesel.
"The price decrease came earlier than expected," said Wang Qiang, an analyst at Xiangcai Securities Co.
"However, it is justified considering the depressed oil demand due to recent natural disasters and relatively high pressure from inflation."
Basket tracked
China's fuel-pricing mechanism tracks a basket of global crude prices and calls for an adjustment when a 22-day moving average changes more than 4 percent.
As of last Friday, the 22-day moving average of global crude fell 3.24 percent.
"The NDRC usually responds more quickly when global crude prices tumble, compared with crude increases," said Wang.
The commission last increased the prices of both gasoline and diesel by 320 yuan a ton on April 13. It did not make an additional increase when the 22-day moving average rose as much as 6 percent on May 5.
"We will not adjust the fuel price when global crude prices fluctuate widely to avoid frequent changes in domestic fuel prices," the NDRC said in a statement on its Website. "The decision to cut prices is in line with the global crude price movement trend."
Gas increases
Global crude prices yesterday were about US$75 a barrel after hitting a high of US$86.19 on concerns the European debt crisis will hobble the economic recovery in the region.
However, industry observers believe global crude prices are likely to continue to fluctuate around US$75 a barrel this month and pick up in July, the peak season for the product.
China will also raise wholesale natural gas prices by 24.9 percent to 1,155 yuan per 1,000 cubic meters starting today, the first increase in more than two years, the NDRC said in a statement.
"The price of domestic natural gas is significantly lower than other replaceable energy, leading to a huge supply shortage in some regions," the NDRC said.
"The price rise should improve the allocation and conservation of the resource," the commission said.
Natural gas imports are expected to be more than 15 billion cubic meters this year, more than doubling the 7.8 billion cubic meters of 2009.
The shortage gap widened to 9 billion cubic meters in 2009 from 3 billion cubic meters a year ago, according to the commission.
The move reflects recent drops in global oil costs.
At Shanghai's pumps, the price for widely used 93-octane gasoline fell 2.47 percent to 6.7 yuan (98 US cents) a liter from 6.87 yuan.
The price of zero-grade diesel in Shanghai was down 2.8 percent to 6.58 yuan a liter from 6.77 yuan.
Retail prices will inevitably vary between regions.
Overall, the price of gasoline went down by 230 yuan to 7,190 yuan a ton, while the price of diesel fell 220 yuan to 6,460 yuan a ton, effective today, according to the National Development and Reform Commission, China's top economic planner.
This equates to a 3.1-percent decline for gasoline and a 3.29-percent drop for diesel.
"The price decrease came earlier than expected," said Wang Qiang, an analyst at Xiangcai Securities Co.
"However, it is justified considering the depressed oil demand due to recent natural disasters and relatively high pressure from inflation."
Basket tracked
China's fuel-pricing mechanism tracks a basket of global crude prices and calls for an adjustment when a 22-day moving average changes more than 4 percent.
As of last Friday, the 22-day moving average of global crude fell 3.24 percent.
"The NDRC usually responds more quickly when global crude prices tumble, compared with crude increases," said Wang.
The commission last increased the prices of both gasoline and diesel by 320 yuan a ton on April 13. It did not make an additional increase when the 22-day moving average rose as much as 6 percent on May 5.
"We will not adjust the fuel price when global crude prices fluctuate widely to avoid frequent changes in domestic fuel prices," the NDRC said in a statement on its Website. "The decision to cut prices is in line with the global crude price movement trend."
Gas increases
Global crude prices yesterday were about US$75 a barrel after hitting a high of US$86.19 on concerns the European debt crisis will hobble the economic recovery in the region.
However, industry observers believe global crude prices are likely to continue to fluctuate around US$75 a barrel this month and pick up in July, the peak season for the product.
China will also raise wholesale natural gas prices by 24.9 percent to 1,155 yuan per 1,000 cubic meters starting today, the first increase in more than two years, the NDRC said in a statement.
"The price of domestic natural gas is significantly lower than other replaceable energy, leading to a huge supply shortage in some regions," the NDRC said.
"The price rise should improve the allocation and conservation of the resource," the commission said.
Natural gas imports are expected to be more than 15 billion cubic meters this year, more than doubling the 7.8 billion cubic meters of 2009.
The shortage gap widened to 9 billion cubic meters in 2009 from 3 billion cubic meters a year ago, according to the commission.
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