Retail fuel rates reduced after global crude falls

By Du Juan (China Daily) Updated: 2014-10-18 09:06

NDRC measures likely to affect domestic refining companies

With world crude oil prices tumbling, China's top economic planning agency said that it will lower domestic fuel prices by about 300 yuan ($49) a metric ton effective Saturday, the sixth cut in four months.

Retail gasoline prices will drop 300 yuan a ton and diesel prices will fall 290 yuan a ton, the National Development and Reform Commission said on Friday.

Given slowing global crude demand and increasing energy supplies from the United States and Organization of the Petroleum Exporting Countries, oil prices will continue to drop, said Han Jingyuan, crude analyst at JYD Online Corp, a Beijing-based bulk commodity consultancy. Han said another round of fuel price cuts are likely on Oct 31.

The scale of the latest cuts is below expectations of a 330 yuan reduction. But the cuts are still the largest this year. JYD forecast that the NDRC will cut retail prices by about 370 yuan a ton next time.

China has adjusted retail fuel prices 14 times so far this year, with 10 cuts and four rises.

International crude prices have been declining since June. The international crude benchmarks－Brent crude and West Texas Intermediate－each dropped by 20 percent during the past four months. Prices sank below $90 a barrel in September.

"China's economy is recovering slowly. The recent CPI and PPI data were lower than market expectations, which has added to investors' worries," Han said.

The International Monetary Fund has lowered its global economic growth outlook for the third time this year to 3.3 percent. Gloomy macroeconomic predictions are leading analysts to pare back their forecasts for crude demand.

The US Energy Information Administration lowered its global crude demand estimate to 91.55 million barrels per day in 2014 and 92.89 million bpd for next year.

Meanwhile, the US and OPEC members are continuing to supply more crude. US crude output reached 8.7 million bpd in September, the highest since July 1986.