Blended Oil Prices to Rise Further

Blended Oil Prices to Rise Further

In Q3, 2018, as the prices of oil blending feedstock increased by over RMB 1,000/mt, the gasoline and diesel prices kept rising. Meanwhile, the profits at traders continued to decline.

In 2018, the gasoline prices hovered at highs, and the diesel prices fluctuated upward. Therein, the gasoline and diesel prices surged in Q3, 2018. On the one hand, supported by the increased international crude oil prices, China’s refined oil prices kept rising. On the other hand, the blended oil prices continued to move up due to the relatively high costs. Besides, the sales at traders performed well, as downstream users replenished stocks. On the whole, China’s diesel and gasoline prices were stable-to-rising.

As seen in the tables above, the oil blending feedstock prices kept rising, and most of them increased by over RMB 1,000/mt. SCI learnt that the profits at blenders were lower than RMB 100/mt, and some blenders even suffered profit losses.

In the short term, the international crude oil prices will fluctuate within a narrow range, giving thin support to China’s refined oil market. With the approach of the National Day holiday, downstream users will replenish stocks ahead of schedule, thus the downstream demand for gasoline and diesel will improve to some extent. Besides, most market participants hold bullish sentiment towards China’s refined oil market, and the feedstock prices remain high. All in all, SCI reckons that China’s gasoline and diesel prices will continue to move up.