Finished oil prices will remain high in 2017

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Source: China Business News Network. Added on: 2016-12-30 13:36:52. Views: 116. Recently, the prices of refined oil products in China have risen. Industry experts expect that in the next pricing cycle, namely at 24:00 on January 12, 2017, the domestic refined oil market may face a situation of stagnation or a slight increase in prices. The retail prices of refined oil products in 2016 ended with ten increases. According to information published on the website of the **Development and Reform Commission, based on recent changes in international oil prices and in line with the current mechanism for setting refined oil prices, as of 24:00 on December 28, 2016, the prices of domestic gasoline and diesel (standard grades) increased by 100 yuan and 95 yuan per ton respectively. “Looking back at the adjustments to refined oil prices in 2016, influenced by the floor price and the rebound in crude oil prices, this year’s adjustments to domestic refined oil price limits have been mainly upward. According to data from Zhuochuang Information, as of 24:00 on December 28, 2016, there had been 25 price adjustment periods in China, of which 5 saw price cuts, 10 saw price increases, and 10 saw no changes. After offsetting gains and losses, gasoline has seen an overall increase of 1,015 yuan per ton, which translates to an increase of 0.80 yuan per liter for 92#/93# gasoline; diesel has seen an overall increase of 975 yuan per ton, resulting in an increase of 0.83 yuan per liter for 0# diesel. In 2015, there were 25 price adjustment periods in China: 12 times the prices were lowered, 7 times they were raised, and 6 times no change was made. After accounting for these changes, the price of gasoline dropped by 670 yuan per ton, which translates to an increase of 0.53 yuan per liter for 92# and 93# gasoline; the price of diesel dropped by 715 yuan per ton, resulting in an increase of 0.61 yuan per liter for 0# diesel. Looking at the fluctuations over the two years, an upward trend was evident in 2016. As of December 28, 2016, the cumulative price of gasoline was 1,685 yuan per ton higher than in 2015, which translates to an increase of 1.32 yuan per liter for 92# and 93# gasoline; the cumulative price of diesel was 1,690 yuan per ton higher, resulting in an increase of 1.44 yuan per liter for 0# diesel. ”said Yang Xia, an analyst at Zhuochuang Information. Profit margins at gas stations are expected to rise before the Spring Festival. According to Wang Neng, an analyst at Zhuochuang Information, following the price increases mandated by the National Development and Reform Commission, the retail prices of refined oil products in China have seen three consecutive increases since October, which will lead to higher retail prices at gas stations. With the new year arriving, domestic gas stations are expected to see strong profits at the start of the year. “Firstly, following the implementation of the price increases ordered by the National Development and Reform Commission, domestic gas stations will raise their retail prices to the highest levels, while private gas stations will also increase their prices accordingly based on the original rates. In the wholesale sector, as diesel prices in various regions were already at or above the wholesale price limits prior to the price increase, and given that the magnitude of this increase was small along with weak market demand, it is expected that wholesale prices for diesel and gasoline will not rise significantly following this increase. To boost sales, some suppliers might even consider lowering prices; as a result, the gap between wholesale and retail prices for diesel and gasoline could widen, leading to a substantial increase in the profits of gas stations. Secondly, starting from New Year’s Day 2017, gasoline and diesel meeting National Standard V will be available across the country. At that time, in line with the principle of higher quality at higher prices, gas stations will implement corresponding price increases: the price of gasoline will rise by 170 yuan per ton, resulting in an increase of 0.13 yuan per liter for 92# gasoline; the price of diesel will rise by 160 yuan per ton, leading to an increase of 0.14 yuan per liter. Even with the upgrade of fuel standards to National V, wholesale prices for National V gasoline and diesel may increase slightly in some areas. However, next month is a traditional off-season, and demand will gradually decline. Additionally, gas stations will lower their prices in an effort to achieve good sales at the start of the month. Taken all together, it is likely that gas station profits will first drop before rising again next month. ”Wang Neng said. The first increase in 2017 may occur. \"Starting from January 1 next year, the production cut agreement will come into effect, which will clearly have a positive impact on the crude oil market. However, it is also possible that factors such as an increase in U.S. shale oil production could exert downward pressure on oil prices. It is expected that during the next pricing period, international crude oil prices will generally show an upward trend with some fluctuations.\" As a result, in the next pricing cycle, namely at 24:00 on January 12, 2017, the domestic refined oil market may face a situation of stagnation or a slight increase in prices. ”Xu Na, an analyst at Zhuochuang Information, said. Xu Na believes that, given the sustained positive impact of the production cut agreement on the crude oil market in the first half of 2017, if such agreements are continued in the second half of the year, oil prices are likely to rise by around $10 compared to this year. If these agreements cannot be maintained, there is a possibility that oil prices could return to the $40 level in the second half of next year. Overall, in the first half of next year, domestic refined oil price adjustments will likely continue to be upward-oriented, while in the second half, oil price fluctuations may become more frequent.