SunSirs: The Change Rate Remains Negative, and the Downward Trend in Retail Prices of Refined Oil Products in 2023 is Coming to an End

The current domestic refined oil price adjustment window opened at 24:00 on December 19, and the zero selling price of refined oil has once again been lowered. The retail price adjustment in 2023 has gone through "ten increases, eleven decreases, and three shelving". The crude oil market trend has declined during the cycle, and the rate of change remains negative. The retail price of refined oil in this round may experience "six consecutive declines".

Entering this pricing cycle, international oil prices have declined. As of the 18th, the settlement price of the US WTI crude oil futures main contract was $72.82 per barrel, and the settlement price of the Brent crude oil futures main contract was $77.95 per barrel. Firstly, the unexpected increase in CPI data and the rebound in inflation have lowered market expectations for the Federal Reserve's interest rate cut at the beginning of next year; The crude oil market has shown a downward trend due to market concerns about oversupply. Secondly, the results of the OPEC+production policy meeting did not meet market expectations. On the one hand, the reduction in production was not as expected, and on the other hand, the voluntary reduction in production was questionable, putting greater pressure on the supply side in the future. Finally, Federal Reserve Chairman Powell stated that interest rate hikes aimed at curbing inflation may come to an end, but there is still a possibility of further rate hikes. The bearish factor is dominant, and international oil prices have fallen in this cycle. As of the 19th, the change rate of crude oil varieties was -9.05% on the 10th working day. It is expected that gasoline will be reduced by 415 RMB per ton, diesel will be reduced by 400 RMB, and the discounted prices will be reduced by 89# 0.31 RMB, 92# 0.32 RMB, 95# 0.34 RMB, and 0# 0.34 RMB. This round of retail prices of refined oil products will be lowered for the 12th time this year.

In terms of gasoline: Recently, the operating rate of refining in Shandong has slightly increased, and the shortage of crude oil quotas for refining in Shandong may be alleviated. The supply of finished oil may be low, and overall, the operating rate of atmospheric and vacuum distillation in Shandong has slightly increased, while the supply of finished oil for refining in Shandong has slightly increased; There has been little change in the operation of domestic main refineries, while the supply side remains stable. With the widespread cooling and rainy and snowy weather in many parts of China affecting travel, coupled with the lack of holiday support and the loss of air conditioning oil support, the demand for gasoline has decreased, and some businesses are not actively purchasing, resulting in a downward trend in gasoline prices.

In terms of diesel, there has been a slight increase in diesel supply, coupled with a decline in cost trends. With the impact of low temperature, rain, and snow weather, diesel demand in the infrastructure industry has gradually weakened. Outdoor infrastructure, engineering, and other construction projects have also declined. Logistics transportation has been restricted by rain and snow, resulting in a decline in diesel demand and a sluggish diesel market.

Looking at the future: Currently, crude oil faces dual pressures from both macro and supply and demand sides. However, due to geopolitical factors, crude oil transportation is subject to certain restrictions, and the combined influence of long and short factors, the oil market may maintain a wide range of fluctuations in the short term. In terms of domestic supply, refineries in Shandong have slightly increased their production, but downstream demand is mainly in demand, lacking substantial benefits. In the short term, the price of gasoline and diesel is prone to decline but difficult to rise.

If you have any questions, please feel free to contact SunSirs with support@sunsirs.com.