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Oil Price Sees 8th Increase This Year, Higher Prices Likely Ahead
On October 10th, information from the National Development and Reform Commission indicated that in response to recent changes in international oil prices and in accordance with the current mechanism for forming refined oil prices, domestic gasoline and diesel prices (standard products) were increased by 140 yuan and 135 yuan per ton respectively, effective from 24:00 on the same day.
The reporter noted that this was the eighth increase in fuel prices this year. After this adjustment, the pattern of refined oil price adjustments for the year has become "eight increases, eight decreases, and four standstills."
Regarding the future movement of refined oil prices, Wang Yantin, a refined oil analyst at Jinlunchuang, said that international crude oil prices have maintained a volatile trend, and there is still a possibility of a new round of retail price increases, which will provide some support for the later market.
The Israel-Palestine conflict has driven up international oil prices.
During this round of price adjustment, international crude oil showed a trend of falling first and then rising, with an overall increase to a certain extent. Affected by the upward trend of crude oil prices, the rate of change remained in a positive range. According to Jinlunchuang's calculations, as of the tenth working day on October 10th, the average price of the reference crude oil varieties was $73.02 per barrel, with a change rate of 2.96%. The domestic retail price was adjusted upwards, with gasoline increasing by 140 yuan/ton and diesel by 135 yuan/ton, translating to an increase of 0.1 yuan for 89#, 0.11 yuan for 92#, 0.12 yuan for 95#, and 0.12 yuan for 0# per liter.
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Based on the current adjustment range, for a private car with a fuel tank capacity of 50L, filling up a tank of fuel will cost an additional 5.5 yuan.
Recently, international crude oil prices have risen to a relatively high level. After entering a new round of pricing cycles, the rate of change for crude oil will continue to fluctuate in a positive range. On the first working day after the adjustment, the rate of change will be around 2.6%, corresponding to an increase of about 105 yuan/ton for gasoline and diesel. In the short term, the trend of international crude oil will still be dominated by fluctuations, and there is a high probability of a small increase in the retail price of gasoline and diesel in the new round. The adjustment window period is October 23, 2024.
Wang Yantin said that at the beginning of this round of price adjustment, investors' concerns about the economic outlook and energy demand put pressure on oil prices, and international crude oil prices fell for a while. Subsequently, the Israel-Palestine conflict made investors worry that the further escalation of geopolitical conflicts in the Middle East could lead to interruptions in oil production in the region. Boosted by this, international oil prices rose sharply. Later, although there was news that OPEC+ would continue to advance the oil production increase plan for December, and Saudi Arabia was committed to resuming production on December 1st, this formed a bearish factor for oil prices, causing them to fall again. However, within this pricing cycle, international crude oil prices still rebounded slightly overall.
Looking at the domestic market, at the beginning, international crude oil fluctuated and fell back, and the rate of change narrowed positively for a while, and the news had a negative impact on the market mentality. Coupled with continued weak downstream demand, downstream users were cautious in entering the market for purchases, manufacturers faced greater pressure to sell, and gasoline and diesel prices continued to be adjusted downwards. Later, considering the market demand picked up during the National Day holiday, and the overall gasoline and diesel prices had fallen to a lower level, crude oil prices continued to rise sharply, which was significantly uplifting for the market mentality. The industry increased its purchases, market transactions improved, and the quotations of local refineries were adjusted upwards. After returning from the National Day holiday, the overall increase in gasoline and diesel prices widened.
The probability of an increase in the next round of price adjustments is relatively high.As of 11:00 AM Beijing time on October 10th, WTI November crude oil futures were reported at $73.81 per barrel, up by $0.57; Brent December crude oil futures were the latest reported at $77.14 per barrel, up by $0.56.
Regarding the upcoming fluctuations in international oil prices, Wang Yantin stated that international crude oil prices are maintaining a volatile trend, and there is still a probability of a new round of retail price increases. The news face has certain support for the later market. In addition, diesel is still in the traditional demand peak season of "Golden Nine Silver Ten," and considering the recent government's policies to stimulate economic development are being promoted one after another, it is also good for the resumption of work in the downstream industry of diesel, and there may be a good expectation for diesel demand, which still has a boosting effect on prices. However, in terms of gasoline, as the National Day holiday ends, private car travel will return to normal, gasoline demand will become stable, the pace of shipments from the main operators and local refineries will slow down, and the downward pressure on the market will emerge. Overall, affected by the difference in demand, the recent domestic gasoline and diesel market may show a trend of "gasoline falling and diesel stabilizing."
Longzhong Information stated that looking at the future market, although the support from recent geopolitical factors has weakened, international oil prices do not yet have the conditions for a sharp decline. The atmosphere of OPEC+ production cuts continues, and the Federal Reserve may continue to lower interest rates in November. Overall, it is expected that the probability of the next round of refined oil price adjustments being raised is relatively high.
In terms of the domestic market, Longzhong Information mentioned that after the end of the National Day holiday, gasoline demand returns to normal, and consumption is expected to decline, and prices may continue to fall; for diesel, entering the "Silver Ten" stage, there is still a rigid demand, and consumption is expected to grow slightly. However, due to the rapid increase in crude oil prices during the National Day period, it has driven downstream market replenishment, and inventory has increased. Subsequently, under the unclear trend of crude oil prices, the market may mainly be cautious and wait-and-see, and it is expected that domestic diesel prices may show a narrow range of weakening trends.
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