The current China domestic refined oil price adjustment window opened at 24:00 on October 10th, and the retail price of refined oil may be lowered according to the mechanism. The 2023 retail price adjustment has gone through "ten increases, six falls, and three strandings", with crude oil market prices rising and falling sharply during the cycle, and the rate of change changing from positive to negative. The domestic refined oil retail price may enter the "seventh decline" of the year.
Entering this pricing cycle, international oil prices have significantly increased and decreased. During the holiday period, the international crude oil market has significantly declined, and after the holiday, oil prices have significantly increased. As of the 9th, the settlement price of the main contract for WTI crude oil futures in the United States was $86.38 per barrel, and the settlement price of the main contract for Brent crude oil futures was $88.15 per barrel. In late September, the international oil market showed a strong trend, mainly due to the extension of the production reduction deadline by the Organization of Petroleum Exporting Countries and its allies (OPEC+). Leading countries Saudi Arabia and Russia have extended their plan to reduce crude oil supply by 1.3 million barrels per day until the end of the year. The continuous supply gap caused by the production reduction has been significant, which has boosted crude oil prices. However, during the holiday period, crude oil prices significantly decreased, and the strengthening of the US dollar put pressure on oil prices. This week, the US dollar continued to move at a high level, putting valuation pressure on the commodity market priced in US dollars. In addition, profit taking by investors has also exacerbated the short selling sentiment in the market. More importantly, the performance of the US economic data is eye-catching, and the market is concerned that the Federal Reserve still has expectations of raising interest rates, resulting in a significant decline in crude oil prices. Overall, the trend of international oil prices has slightly declined during this cycle. As of the 10th working day, the change rate of crude oil varieties was -1.7%. It is expected that gasoline will be reduced by 85 RMB/ton, diesel will be reduced by 80 RMB/ton, and the prices will be increased by 92# 0.07 RMB, 95# 0.07 RMB, and 0# 0.07 RMB. This round of retail prices of refined oil products will welcome the "seventh" decline of the year.
In terms of gasoline: At the beginning of the holiday, gasoline was affected by the lower cost of crude oil prices, coupled with an increase in inventory in some refineries. The domestic gasoline market price trend has significantly declined. However, as some intermediaries have restocked after the holiday, the production and sales rate of Shandong refineries has exceeded 100%, leading to a slight increase in domestic gasoline market prices.
In terms of diesel: Affected by the trend of crude oil, the price of diesel in the post holiday market has significantly decreased. However, the workload of outdoor infrastructure projects, industrial and mining industries has gradually increased, coupled with the support of agricultural autumn harvest demand, the demand side supports the domestic diesel market. As the weather turns colder and winter in the northern hemisphere approaches, the peak season of heating oil demand has begun, providing some support for the diesel market. Subsequently, the price trend of the domestic diesel market has increased.
In the future market, Saudi Arabia, Russia and other countries are still reducing production in terms of supply, with tight supply side performance and historically low crude oil inventories. Supply will still play a stabilizing role in the future of oil prices. In addition, the Palestine Israel conflict will provide some support to the crude oil market in the short term, and international oil prices will maintain a strong trend in the short term. In terms of domestic supply, the operating rate of local refineries remains high, and the supply is relatively loose. Some gasoline operators have restocking behavior, but with the end of holidays, gasoline demand weakens, and the price increase in the gasoline market is not significant in the later stage; In terms of diesel, the operating rate of outdoor operations is gradually increasing, and diesel demand is recovering, supporting domestic diesel prices. There is still room for improvement in the diesel market trend.
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