China announced on Wednesday that it will raise the price of retail oil in reaction to global markets, with the National Development Reform Commission (NDRC) saying that the price of diesel and gasoline will increase by 110 yuan, or US$16.7 on the metric ton.
Including Wednesday's announced increase, prices have increased 465 and 450 yuan respectively since the year began.
Wednesday's move marks the fourth hike due to international oil prices. China adjusts oil prices when international prices change more than 50 yuan per metric ton for 10 working days; unless global prices fall below US$40 or top US$130 per barrel.
The commission asked the oil companies to ensure a stable supply, and said that it will continue to monitor global markets. Related: India Putting Floor Beneath Oil Prices As Demand Continues To Soar
In May, China imported 32.24 million metric tons of crude oil, and demand has been high from the country's privately owned refineries.
The government is also intent on bolstering the country's strategic petroleum reserves, which has it tapping the world market. Energy Aspects reports that in the second half of the year, the SPR is averaging around 400,00 barrels per day. That is up from the first half of the year which saw fills of 350,00 barrels per day. Related: Rebound In Oil Prices Changes Drillers' Mindset
Between the demands of the refineries and the deficits in the SPR, China's crude imports should remain around 7.4 million barrels of the day, according to Energy Aspects. As the country's refining capacity increases, there is a commensurate increase in the pressure on regional diesel prices.
The EIA notes that China had been a driver of diesel demand growth in the past but has now reached the status of net diesel exporter. The EIA said that situation has been a contributing factor in the oversupply of diesel in the world market.
By Lincoln Brown for Oilprice.com
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