SunSirs: The supply of China Refined Oil Exceeds the Demand, Market Price Continues to Decline in mid and Late June

With the increase of rainfall, the demand of China domestic market is not enough to boost, and the operating rate of refineries remains high, and the supply of refined oil is sufficient. The domestic gasoline and diesel prices continue to decline in the middle and late June. According to the monitoring data of SunSirs, domestic gasoline and diesel prices fell by 3.96% and 5.29% respectively in the middle and late June.

On the demand side, the demand for gasoline was not good enough. For gasoline, rainstorm weather occurred in some parts of the south China, and there were signs of flooding. The northern region also had frequent rainfall, and the demand for gasoline was reduced due to the impact of rainfall. In terms of diesel, the traditional rigid demand industries such as engineering, infrastructure construction and mining still supported the market. However, rainstorms in the South and domestic COVID-19 occurred in a small range, and the activity of logistics and transportation industry declined, so the demand for diesel oil was very weak.

In June, the operating rate of domestic refineries remained at a high level, with the operating rate of main refineries rising to about 71%, and that of Shandong local refineries rising to 76%. The domestic gasoline and diesel supply was sufficient. In late June, crude oil rose above the "floor price" of $40/ barrel. Domestic refined oil was raised after hree months. At 24:00 on June 28, the highest retail prices of domestic gasoline and diesel were increased by 120 RMB/ ton and 110 RMB/ ton respectively. However, the international oil price fell for consecutive days at the end of the month, and the WTI crude oil futures price fell below $38/ barrel. The benefits brought by the price adjustment of refined oil were offset, and the wait-and-see sentiment in the downstream market was revived.

According to the oil product analysts of SunSirs, OPEC+ production reduction continues to support the bottom oil price, but overseas COVID-19 situation is still relatively serious, and the international oil price will remain at about $40/ barrel. In addition, the domestic oil product supply is sufficient, and it is expected that the domestic oil product price will continue to decline under pressure in the short term.

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