By Lin Guan (chinadaily.com.cn)
Updated: 2007-11-07 17:18

Soaring international crude oil prices are likely to discourage Chinese oil refiners and encourage refined oil exports, thus decreasing domestically refined oil supply, Shanghai Securities News reported.

Related readings:  China underlines stable prices following oil price hikes  Oil price hikes put refiners in a bind  Oil price hikes ruled out  Oil price hike likely in October

According to a Shanghai Petroleum Exchange report, foreseeably high crude oil prices will cause domestic refineries to slow production to around 27 million tons, the least among all the four quarters.

International crude oil is rising steeply as the average cost per barrel has surged from US$83.849 in October to US$93.572 last week on the WTI crude oil futures, the newspaper said.

Despite the 500 yuan price rise in fuel per ton by the National Development and Reform Commission starting November 1, domestic refineries may still lose considering current costs. Under the present price, Sinopec, one of the two major refiners in China, can profit if crude oil price stands below US$85 per barrel and its loss caused by halting production will equal to that by continuing production if the price rise to no more than US$97 per barrel. The other giant refiner PetroChina has even less tolerance than Sinopec.

Shanghai Petroleum Exchange report forecast a five percent increase in refined demand in the last quarter. Demand in gas and diesel are expected to rise six percent year on year. Light oil demand is also predicted to advance 14 percent, while fuel oil and LPG will see a slow-down in growth.

Due to limited oil resources, there is likely to be a two percent drop in domestic crude oil production growth in the fourth quarter, with total output of 15.5 million tons, the report said.