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On April 29, gasoline and diesel prices were lowered again
On April 29, the National Development and Reform Commission announced that the retail price of gasoline and diesel was reduced by 70 yuan per ton. This means that the retail prices of petrol and diesel have been lowered for the second time this year. According to the calculation of the reduction range, No. 92, No. 95 gasoline and No. 0 diesel were reduced by 0.05 yuan, 0.06 yuan and 0.06 yuan per liter respectively. This means that filling up a tank of 50 liters of petrol will be about 2.5 yuan cheaper than before.
The decline in international oil prices is the main reason for this round of price cuts
Industry analysts believe that the main reason for the decline in the price of refined oil products in this round is the decline in international crude oil prices. Since the beginning of this pricing cycle, although the international crude oil price has fluctuated in a narrow range, it is generally in a downward trend, resulting in a negative change in the reference crude oil price for the pricing of refined oil products in the mainland.
Affected by the recurrence of the epidemic and geopolitical tensions, the expectation of tightening crude oil supply and demand has eased, but the upward pressure on inflation in the world's major economies is greater, which curbs the rapid rise in oil prices.
Refined oil consumption remains weak and supplies are abundant
Industry analysts believe that the current consumption of refined oil products in the mainland is still relatively weak. Due to the repeated impact of the epidemic, it is difficult to release travel demand; Industrial production is also facing downward pressure, with most of the manufacturing PMIs below the boom and bust line.
This has had a certain impact on diesel demand. At the same time, the supply side of refined oil products is relatively abundant, the operating rate of major independent refineries has fallen, the output of gasoline and diesel has been increased to a certain extent, and commercial inventories have continued to accumulate, especially gasoline inventories have increased sharply year-on-year. This provides conditions for the adjustment of the price of refined oil products.
Oil product prices remain under upward pressure
Despite the current downward revision, refined oil prices are still facing some upward pressure. Entering the peak season from May to September, U.S. gasoline demand is expected to improve. OPEC+ plans to maintain its current production policy until the end of June, while the Russia-Ukraine situation also increases geopolitical risks
OPEC+ output could fall by 300,000 b/d in the first quarter, and the pace of growth in Russian and U.S. crude oil production has slowed, adding to the certainty of tight supply and demand. Therefore, there is a high probability that oil prices will fluctuate at high levels.
The price trend of refined oil products depends on many factors
The future trend of refined oil prices will depend on supply and demand fundamentals, geopolitical situation, Federal Reserve policy and other factors. If geopolitical risks continue to ease and the dollar index strengthens further, oil prices could come under pressure to the downside and test the bottom.
However, the fundamentals of supply and demand are still relatively stable, and as long as the situation between Russia and Ukraine does not deteriorate, it will be difficult for oil prices to fall again. In addition, inflationary pressures and economic recovery will also affect the recovery of refined oil consumption. Considering all factors, oil prices may fluctuate at a high point in the short term, but they are still expected to maintain a strong pattern in the future.
Policy recommendations
Accelerate the adjustment of the energy structure and develop clean alternative energy. Enrich the energy supply and reduce dependence on oil. Improve the price formation mechanism of refined oil products and improve price elasticity. Allow more market factors to participate in price adjustment.
Strengthen the adjustment and rotation of reserves to ensure the supply of refined oil. Avoid being too monolithic in supply and relying on imports. We will continue to expand the export of oil products and improve the efficiency of refining and chemical products. Adjust the imported crude oil varieties according to the international market.
Strengthen cooperation in the industrial chain and improve the level of refining and chemical integration. Reduce costs and ensure the safety of refined oil supply. Guide rational consumption and avoid the rapid collapse of consumption. Appropriate measures such as taxation should be adopted to curb excessive demand. Strengthen forecasting and early warning, and closely track changes in the international crude oil and refined oil markets. Adjust the domestic price level in a timely manner.
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