NDRC likely to raise oil prices Tuesday

The National Development and Reform Commission (NDRC) is very likely to raise domestic oil products prices Tuesday for the second time in two months, experts said over the weekend, as international crude oil prices have increased over 8.3 percent over the last month.

Just about a month ago, the NDRC had announced to raise domestic gasoline price by 390 yuan ($61.48) per ton and diesel price by 370 yuan per ton, after three consecutive price cuts since May.

"An increase of 8.3 percent in international oil prices will translate into a price hike of some 500 yuan per ton in domestic gasoline price," Wang Jintao, chief analyst at commodity information provider Zibo Zhongyu Information Technology Co, told the Global Times.

Wang said that the NDRC will very likely announce the price increase late Monday.

Under the current pricing mechanism for oil products, the NDRC adjusts domestic gasoline and diesel prices when a basket of crude oil prices - Brent, Dubai and Cinta - changes by 4 percent for 22 consecutive working days. The requirement will be met on September 10, analysts said.

Wang noted that different from previous price increases, when the NDRC had to take into consideration the inflation pressure, the commission may not delay the price increase this time as China's CPI growth has remained around 2 percent during the past three months.

Currently, the average of the three crude oil prices has surged to around $113 a barrel. "The weak US economic data has prompted stronger expectation that the US government may launch a new round of quantitative easing, which has been a major reason behind the current increase in international oil prices," Wang noted.

However, Zhou Minzhen, an industry analyst at ICIS C1 Energy, told the Global Times that there is little possibility that international oil prices will see another increase of 4 percent next month, given that the US government may also release oil reserves to avoid a huge price hike ahead of the election.