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China will raise retail prices for gasoline and diesel starting today, to reflect the increase in international crude oil prices, Xinhua has reported.
The price hike will be around $28 per ton for both fuels, the state news agency reported, citing a statement by the National Development and Reform Commission.
The price hike is part of China’s standard response to higher international oil prices.
Brent crude topped $80 per barrel earlier this month and both it and WTI posted their first monthly gain in January amid the intensifying crisis in the Red Sea and an escalation between the U.S. and Iran.
The gain comes despite continued concern about China’s economic growth prospects, which deepened after Beijing reported that manufacturing activity in the country shrank for the fourth month in a row in January.
"Economic momentum remained muted as the deflationary pressure persists," one analyst from Pinpoint Asset Management told Reuters and added that he expected the Chinese central bank to cut rates in the first half of the year in order to boost domestic consumption.
"It is not clear if the latest rise in the PMIs reflects a further improvement in January or simply the easing of sentiment effects that have been weighing on the surveys," another expert told Reuters.
"Either way, it adds to evidence that growth momentum in China is in the midst of a renewed recovery, albeit one that remains on shaky foundations and is unlikely to be sustained once current policy support is pared back," Evan Pritchard, head of China economics at Capital Economics, said.
China, along with India, is the biggest driver of oil demand growth in the world and will continue to be so for the observable future. Because of its status as a demand growth driver, China is the focus of attention for oil traders and investors.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com