Retail fuel prices set to rise again

The National Development and Reform Commission, the nation's top economic planner, said on Friday that retail prices of gasoline would be hiked by 120 yuan a metric ton, or 0.09 yuan a liter from Saturday, while diesel prices would go up by 115 yuan a ton, or 0.1 yuan a liter. [Asianewsphoto by Xu Congjun]

Retail gasoline prices are set to go up from Saturday in line with China's fuel price adjustment mechanism, despite the steep fall in global crude prices.

The National Development and Reform Commission, the nation's top economic planner, said on Friday that retail prices of gasoline would be hiked by 120 yuan ($19.39) a metric ton, or 0.09 yuan a liter from Saturday, while diesel prices would go up by 115 yuan a ton, or 0.1 yuan a liter.

After the retail price rise, the benchmark price of 90-octane grade gasoline will be 5.82 yuan a liter.

Retail oil prices in China have seen three hikes and three cuts so far this year. After the adjustments, retail gasoline prices are higher by 15 yuan a ton while diesel prices are down 40 yuan a ton compared with the prices at the beginning of the year.

Li Yan, a crude oil analyst at domestic consultancy Shandong Longzhong Information Technology Co, said global crude prices have been fluctuating at low levels of between $47 a barrel and $57 a barrel during the first quarter and there is no clear sign of improvement compared with the falling trend last year.

With crude output in the United States not declining as expected during the first quarter, global crude price dropped by 8 percent on Wednesday.

"The demand will not rebound rapidly and the US crude stock is likely to grow in the following weeks, which will lead to depressed crude prices in the second quarter," he said.

According to Li, the price of US benchmark West Texas Intermediate crude for the second quarter will be around $47 a barrel to $54 a barrel. Brent crude may stay between $53 a barrel and $59 a barrel, he said.

Xue Qun, an oil product analyst at the consultancy, said fuel costs for family drivers will go up by 0.7 yuan per 100 kilometers. Logistics companies will pay an additional 35 yuan to 40 yuan for each 1,000 kilometers for fueling the trucks. The logistics industry has remained weak in the first three months, said Xue.

"Demand for diesel will pick up as infrastructure construction projects start in spring," she said.

The authorities raised the fuel tax three times last year, increasing the tax from 30 percent to the current 45 percent, during the global crude price plunge.

Zhang Meng, a refined oil products analyst with the consultancy, said the wholesale market for oil products remained weak in March and many gas stations are expected to carry out promotions next week to attract consumers after the price hike.