China will be reducing the retail prices of gasoline and diesel by US$12.29 (85 yuan) per ton effective Wednesday, to reflect the lower international crude oil prices, the National Development and Reform Commission (NDRC) said on Tuesday.
The lowered prices of gas and diesel is the second price cut by China's top economic planner this year, as per its pricing policy to adjust domestic oil product prices in case international crude oil prices drop or rise by more than US$7.232-the equivalent of 50 Chinese yuan-per ton in a period of 10 business days, Xinhua news agency said.
Over the past week, oil prices have dropped, with WTI prices breaking below the US$50 per barrel floor it had been standing on since OPEC agreed in late November to curb collective output in a bid to rebalance and market and lift oil prices. However, resurging U.S. shale output and record high inventories in the U.S. are now mostly offsetting the price gains from the OPEC deal.
According to China's NDRC price monitoring center, as quoted by Xinhua, weak demand is expected to keep oil prices at a relatively low level in the short run.
The previous cut in the Chinese gasoline and diesel retail prices, the first one this year, was made in late January, when the NDRC reduced gas and diesel prices by US$10.12 (70 yuan) a ton.
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Year to date, China has also increased retail gas and diesel prices twice, and the total accumulated price adjustment so far this year has been a reduction of US$5.062 (35 yuan) per ton.
Last year, China met 64.4 percent of its crude oil demand with imports because of high production costs at home and favorable international prices resulting from the global glut. This was a 3.8-percent increase on 2015, Chinese media reported, adding that this level of oil imports dependency will increase further this year. Last year, China produced crude oil at an average cost of US$45-50 a barrel, while international prices were lower than that for much of the year, allowing the second-largest consumer of the fuel in the world to satisfy its domestic demand with higher imports.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More