Fuel prices likely to be cut this month

Domestic retail gasoline and diesel prices are likely to be cut this month, analysts said Sunday, given that international oil prices have dropped by more than 3 percent during the past few weeks, approaching the country's requirement for adjusting oil prices.

The average price of the three crude oils - Brent, Dubai and Cinta - on which domestic oil product prices are based, has dropped by 3.14 percent to $109.77 per barrel over the 22 working days until November 1, according to statistics from commodity information provider Zibo Zhongyu Information Technology Co.

"The National Development and Reform Commission (NDRC) is expected to cut domestic gasoline and diesel prices in mid-November by about 300 to 350 yuan ($48.06 to $56.07) per ton," Lü Bin, an analyst at industry research center SCI International, told the Global Times Sunday.

Under the current pricing mechanism for oil products, the NDRC adjusts domestic prices if the average price of Brent, Dubai and Cinta changes by 4 percent over 22 consecutive working days.

On September 11, the NDRC raised domestic oil product prices by around 550 yuan per ton. Since then, international oil prices have been falling due to a series of unfavorable factors.

"Refineries usually overhaul their equipment in October and November, which will dampen the demand for crude oil, and international crude prices have been affected by such seasonal factors," said Lü.

Lü noted that hot money has also been withdrawing from the sector over the past few months as a result of gloomy forecasts, and this has also contributed to a drop in crude oil prices.

Li Li, a senior analyst at research agency ICIS C1 Energy, told the Global Times that extreme weather such as Hurricane Sandy has also cast a shadow on international crude prices during the past few weeks.

"Crude prices in the fourth quarter will continue to be weak," said Li, who also believes that the NDRC will cut domestic oil product prices this month.

Prompted by the decline in international prices, domestic wholesale gasoline and diesel prices have also dropped drastically since the last adjustment of prices by the NDRC.

Statistics from Zibo Zhongyu showed that at present domestic wholesale prices of gasoline are around 180 yuan lower than the ceiling price set by the NDRC.

Gas stations have begun to offer promotions in order to attract consumers. Statistics from industry portal oilboss.cn show that at present 26.5 percent of the 1,182 gas stations in Beijing, and 15.5 percent of the stations in Shanghai have been selling gasoline at prices below the government ceiling price.

An employee at Huandao gas station in Chaoyang district, Beijing, told the Global Times Sunday that the station has offered sales promotions for more than a month, and currently its 92-octane gasoline is selling for 7.46 yuan per liter, 0.6 yuan lower than the government ceiling price.