According to the Commodity Market Analysis System of SunSirs, the price of refined gasoline and diesel in mainland China slightly declined in early May. As of the 9th, the price of 92# gasoline in China was 8,804.8 RMB/ton, a decrease of 1.44%; The domestic price of 0# diesel is 7,259.6 RMB/ton, a decrease of 0.96%.
Cost side: easing geopolitical relations and lowering crude oil pressure
As of the 8th, the settlement price of the main contract for WTI crude oil futures in the United States was $78.99 per barrel, and the settlement price of the main contract for Brent crude oil futures was $83.58 per barrel. During the May Day holiday, crude oil prices significantly decreased, but the rebound of crude oil after the holiday was not significant. Overall, the crude oil market declined in early May, and cost prices fell, bringing some negative news to the domestic gasoline and diesel refining market. The crude oil market slightly declined mainly due to the easing of geopolitical tensions through ceasefire negotiations between Israel and Hamas, resulting in a lower risk premium. On the one hand, the risk of conflict in the Middle East region has decreased, and the positive international oil price supply has dissipated, which has to some extent suppressed the risk premium of crude oil. On the other hand, the signals released by the Federal Reserve to the market have raised concerns among investors that the interest rate cut cycle may not come so quickly. As a result, the international oil price trend has declined, and costs are facing weakened support from the domestic refined oil market.
Supply side: Some units restart and refinery operations rise
Recently, there has been a restart of maintenance facilities in Shandong, and the operating rate of Shandong refineries has increased. The average operating rate of Shandong refineries has risen to around 60.5%. However, there are still maintenance plans for some facilities in mid to late May. In addition, refining profits still affect the production enthusiasm of refineries, and the operating load of local refineries continues to fluctuate. The slight increase in the supply of refined oil has a certain negative effect on the price of refined oil, and the market for refined gasoline and diesel has slightly declined.
Demand side: The demand is lower than expected, and the gasoline and diesel market is weak
In terms of gasoline, after the May Day holiday, intermediaries replenished their inventory as needed, and their purchasing sentiment was not high. As a result, the gasoline market slightly declined in the first half of the year. In terms of diesel, there is insufficient follow-up on downstream demand, and there is little change in the operating rate of outdoor projects. Logistics and transportation are relatively normal, but there is no significant improvement in diesel demand, and diesel prices have slightly decreased. The second batch of finished oil export quotas for 2024 was officially issued, totaling 14 million tons, a decrease of 26% month on month and a year-on-year increase of 56%. As of now, two batches of export quotas have been issued in China, totaling 33 million tons, an increase of 5.01 million tons compared to the same period last year. The increase in export quotas has boosted the domestic refined oil market prices, and overall, the decline in the refined diesel market is not significant.
The instability of the current situation in the Middle East still has a certain positive impact on oil prices, which will keep them at a high level, and the resistance to a significant decline in the future is still significant. In addition, the current demand side is also showing some positive expectations, and the peak driving season in North America will stimulate gasoline demand. The decline in US crude oil and finished oil inventories has also provided support for oil prices. From a domestic perspective, it is difficult to see an increase in the operating rate of refineries in the short term, and residents have returned to normal in terms of travel. However, there has been an increase in oil consumption due to rising temperatures. Overall, the favorable support for gasoline is insufficient, and there is still room for a slight decline in the gasoline market in the later stage; The demand for diesel has not changed much, with sufficient supply, and the diesel market may still decline. However, the wholesale price of diesel is relatively low, and refinery profits are limited, which will limit the decline in diesel.
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