Domestic refined oil prices for retail sales are poised for a second consecutive increase. On July 31st, the National Development and Reform Commission announced that since the July 17th adjustment, international crude oil prices have experienced violent fluctuations, with continuous sharp rises followed by a decline, and then another surge near the end of the current pricing cycle. The average price over the first 10 working days of this adjustment period was significantly higher than the previous period's average.
Reflecting changes in the international oil market, from 24:00 on July 31st, the price of domestic gasoline and diesel (standard grade) will be raised by 685 yuan and 655 yuan per tonne, respectively. This follows a previous increase on July 17th, when gasoline and diesel prices were raised by 300 yuan and 290 yuan per tonne. Based on calculations by SCI99, this translates to increases of 0.54 yuan per liter for 92-octane gasoline, 0.57 yuan for 95-octane gasoline, and 0.56 yuan for 0-diesel. Once this adjustment takes effect, the cost for consumers using fuel will increase. For example, a small family car with a 50-liter fuel tank will cost an extra 27 yuan to fill up with 92-octane gasoline compared to before.
During this pricing cycle, influenced by factors such as repeated geopolitical conflicts, international oil prices have generally seen more gains than losses, exhibiting a phased volatile trend. The average price for this cycle was significantly higher than the previous one. An official from the Price Monitoring Center of the National Development and Reform Commission attributed the recent rise in international oil prices to several factors. On one hand, the uncertain and unpredictable evolution of the geopolitical situation has heightened oil price volatility. During this period, Brent crude oil futures prices briefly broke through $100 per barrel before rapidly falling back to around $84 per barrel. Near the end of this pricing cycle, international oil prices fluctuated upwards to approximately $89 per barrel. On the other hand, the blockage of vital maritime channels for crude oil has exacerbated the supply shortage. Furthermore, a sharp decline in US oil inventories, coupled with peak summer demand for fuel consumption, has also disrupted the trajectory of international oil prices.
In the domestic wholesale market, the wholesale-retail price spread for gasoline and diesel has shown a trend of first narrowing, then widening. Dai Tiandong, an analyst at SCI99, noted that during this pricing cycle, renewed geopolitical tensions fostered strong bullish sentiment in the market. This led downstream and midstream customers to actively purchase crude oil, driving up wholesale prices. During this phase, the wholesale-retail price spread for gasoline and diesel narrowed continuously. However, as crude oil prices fell sharply and terminal demand remained stable, speculative demand weakened. End-users made purchases only for immediate needs, causing overall market sentiment to cool significantly. This dragged wholesale prices down slightly, leading to an expansion of the wholesale-retail price spread. Data models from SCI99 show that as of the close on July 30th, the wholesale-retail price spreads for gasoline and diesel at major domestic refineries had narrowed to 1,047 yuan/tonne and 566 yuan/tonne, respectively, representing contractions of 5.76% and 21.28% compared to July 17th. Over the same period, the spreads for gasoline and diesel from Shandong independent refineries narrowed to 1,396 yuan/tonne and 928 yuan/tonne, contractions of 16.56% and 24.12% from July 17th.
Looking ahead, Dai Tiandong believes that the development of the geopolitical situation remains the primary factor influencing the trend of international oil prices. Given the current market sentiment is volatile, international oil prices are expected to continue a strong upward trend. In the domestic wholesale market, as midstream and downstream customers are largely completing their phased stockpiling, the market is likely to enter a new cycle of inventory reduction. Combined with stable terminal demand, it is expected that wholesale prices for gasoline and diesel may face downward pressure, potentially leading to an expansion of the wholesale-retail price spread.
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