China Gasoline & Diesel Price Surged

China Gasoline & Diesel Price Surged

Up to September 17, the average price of 92Ron gasoline at Shandong independent refineries increased to RMB 7,195/mt, up over RMB 300/mt or 4.5% from last week. The average price of diesel at Shandong independent refineries increased to RMB 6,803/mt, up over RMB 200/mt or 3.82% from last week. Both the prices of gasoline and diesel at Shandong independent refineries rose to their highest levels in 2019.

The main reason led to the price increase of gasoline and diesel was the surge of international crude oil prices. On September 14, two crude oil facilities of Saudi Arabian Oil Company were attacked by several unmanned aerial vehicles. As a consequence, the daily output of crude oil at Saudi Arabian Oil Company temporarily dropped by around 5,700 thousand barrels, accounting for 5% of the global crude oil consumption volume. Accordingly, the international crude oil surged on September 16.

On September 16, the WTI price closed at $62.9/bbl, up $8.05/bbl from the last trading day. The Brent price closed at $69.02/bbl, up $8.8/bbl from the last trading day and hitting the highest increase since 1988.

With the surge of international crude oil prices, many Shandong independent refineries started raising their prices of gasoline and diesel. The mainstream price increase of gasoline was around RMB 200-300/mt, and the price increase of gasoline even reached RMB 500/mt at a few refineries. The mainstream price increase of diesel was around RMB 150-200/mt, and the price increase of diesel even reached RMB 400/mt at a few refineries.

On September 18, the prices of gasoline and diesel at independent refineries continued growing, but the growth slowed down. The daily price increase of gasoline was around 150/mt, while the daily price increase of diesel was around RMB 100/mt.

In terms of state-owned refineries, the prices of gasoline and diesel at state-owned refineries also surged. In North China, the average price of gasoline at state-owned refineries increased by around RMB 500/mt from last week, while the average price of diesel at state-owned refineries increased by around RMB 100/mt from last week. In a few regions, the prices of gasoline and diesel at state-owned refineries even reached the wholesale ceiling prices.

As for midstream and downstream users, due to the surge of gasoline and diesel prices at refineries, most participants adopted bullish attitudes toward the refined oil market, and midstream and downstream users started replenishing their inventory. The sales of gasoline and diesel revived significantly, and the inventory pressure at refineries reduced. However, on September 18, some participants adopted cautious attitudes, and the replenishment from end users declined to some extent.

Currently, the prices of gasoline and diesel at state-owned refineries in some regions have reached the wholesale ceiling prices. Therefore, the further price increase of gasoline and diesel is likely to be limited. In terms of the gasoline market at Shandong independent refineries, with the approaching of the National Day holiday, the gasoline prices will be supported. Meanwhile, the diesel inventory at midstream and downstream users is at a relatively high level, and the downstream users will start consuming their inventory and decline their purchases. Therefore, SCI reckons that there are risks that the future prices of diesel may drop from highs.








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