Domestic oil prices fell twice in a row, ushering in the largest decline in the year

Titanium Media APP

2024-05-15 17:43Posted on the official account of Hebei Titanium Media APP

Domestic oil prices fell twice in a row, ushering in the largest decline in the year

On May 15, 2024, the Price Department of the National Development and Reform Commission issued an announcement that according to the recent changes in oil prices in the international market and in accordance with the current refined oil price formation mechanism, from 24 o'clock on May 15, domestic gasoline and diesel prices (standard products) will be reduced by 235 yuan and 225 yuan per ton respectively.

Since the beginning of this year, domestic oil prices have been lowered continuously for the first time

This round of oil price adjustment is the 10th adjustment this year, but also the first adjustment in May, this year's "rise more and fall less" situation, the mainland retail price of refined oil finally ushered in the second quarter of the first two consecutive drops, car owners travel costs continue to fall.

This round of adjustment is converted into an increase in price, No. 92 gasoline is reduced by 0.18 yuan per liter, No. 95 gasoline is reduced by 0.19 yuan per liter, and No. 0 diesel is reduced by 0.19 yuan per liter. Based on the fuel tank capacity of 50L for an ordinary private car, it will cost 9 yuan less to fill up a tank of 92 gasoline.

After the adjustment, the retail price of refined oil products in the mainland during the year as a whole showed a pattern of "five rises, three drops and two strandings", and this round of adjustment was also the largest reduction in the year. Judging from the situation so far this year, the retail price of gasoline has increased by 570 yuan per ton, and the retail price of diesel has increased by 550 yuan per ton. In addition, after this round of reduction, Shaanxi, Inner Mongolia and other places 92 gasoline prices will also fall to 8 yuan / liter below, in mid-April this year, the mainland 92 gasoline prices after the increase exceeded 8 yuan, back to the level at the end of the third quarter of last year, but since then ushered in two consecutive declines; In terms of No. 95 gasoline, except for Hainan and Tibet, where the price is higher, most areas are currently concentrated between 8.3 yuan/liter and 8.8 yuan/liter.

For the recent reduction in oil prices, institutions generally believe that the United States has begun to replenish strategic petroleum reserves, the US dollar interest rate is expected to rise for a long time and other factors have formed a negative on the supply side and the demand side, coupled with the weakening of the "risk premium" of geopolitical conflicts, international oil prices continue to weaken, and domestic oil prices have also been lowered. However, for the market outlook, various institutions do not have the same views. Jinlianchuang believes that the influence of geopolitical factors is continuing to decline, and the mainstream market economic data shows signs of economic slowdown, and international oil prices may fluctuate at a low level in the future, and domestic oil prices will naturally follow this trend. Longzhong information believes that May is often the peak of travel, demand is expected to improve, and OPEC+ may also further extend the production cut plan, there is good support for the fundamentals, international oil prices may be able to rise again, and it is expected that the next round of oil price increases in the mainland is more probable.

According to the adjustment principle of "ten working days" for the retail price limit of domestic refined oil, the next round of adjustment will be at 24 o'clock on May 29.

In the past month, international oil prices have continued to fall under pressure

In fact, the performance of international oil prices this year can be called strong, and the price of Brent crude oil once exceeded $92 per barrel in early April, reaching a new high in nearly half a year. However, since late April, the performance of the oil market has weakened significantly, and prices have continued to fall. At the end of April, Brent crude oil fell below $87/bbl, and WTI crude oil prices also fell below $82/bbl. By May 15, Brent crude oil had slipped further to around $82/bbl, while WTI crude was hovering around $78/b (WTI fell below $80/b on May 1 for the first time since March 15 this year).

On the news side, there are still a lot of "news" about the geopolitical conflicts that continue to affect energy prices in recent years, especially the Gaza ceasefire talks are the most concerning, although Hamas had informed the ceasefire talks mediators Qatar and Egypt in early May that they agreed to accept the ceasefire plan proposed by the mediators, but since then, Israel and Hamas have repeatedly attitudes, and there has been no actual progress in the ceasefire talks, and the Israeli Public Broadcasting Company (KAN) on May 11 quoted sources as saying that the parties may hold a new round of negotiations. However, at least the easing of the geopolitical crisis has become a general trend, which is reflected in the international oil market, where the "risk premium" in the early stage has been further diluted, and oil prices have continued to fall.

In addition, crude oil is denominated in US dollars, and oil prices are often negatively correlated with the US dollar exchange rate, and the recent statements of the US central bank have further spawned the expectation of long-term higher US interest rates, which also makes US oil consumption, an important influencing factor on the demand side, usher in a negative impact; At the same time, the U.S. Energy Information Fever (EIA) in its monthly short-term report in May expected U.S. crude oil production to increase by 270,000 b/d in 2024, higher than the previous figure, but the global oil demand growth forecast for 2024 was lowered to 920,000 b/d. In addition, news that the United States has begun to replenish its strategic petroleum reserves and that Iraq has said that it will not agree to continue production cuts at the next OPEC+ meeting has also created a negative impact on the supply side.

However, factors such as the increase in oil sands production in Canada and the arrival of the peak summer oil consumption period in mainstream economies have also formed a certain support for international oil prices. At present, in addition to the progress of the global economic recovery, the outlook for oil demand, and changes in geopolitical factors, the next OPEC+ meeting (to be held on June 1) is also in the spotlight, when members will decide how to continue to implement production cuts in the second half of the year. (This article was first published on Titanium Media APP, author|Hu Jiameng, editor|Liu Yangxue)

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