Chinese retail oil prices are rising amid a pickup in the global crude market, increasing costs for the logistics and transportation sectors.
The retail price of gasoline will be raised by 290 yuan ($46.58) a metric ton, or 0.21 yuan a liter, and the price of diesel by 280 yuan a ton, or 0.24 yuan a liter, starting Tuesday.
The increases were announced on Monday by the National Development and Reform Commission, the nation’s top economic planner.
They are the first rises after 13 consecutive cuts since July, when global crude prices started to fall.
Li Yan, a crude oil analyst at domestic consultancy Shan-dong Longzhong Information Technology Co, said although global crude prices fluctuated recently, it is too early to say if they will continue to rise.
A reduction in the number of United States drilling wells, and political tension in Libya are two key reasons for the rise in the price of crude since last week.
International commodities information provider Platts said Libyan production fell by 130,000 barrels a day to 330,000 barrels a day in January as the closure of two major ports in mid-December had a continuing effect.
Fighting continues around one terminal, and most of Libya’s main producing fields are closed.
The Organization of Petroleum Exporting Countries led by Saudi Arabia pumped 29.94 million barrels of crude a day in January, down by 90,000 barrels a day from December, resulting in investor expectations of increases in the price of crude.
Under the current retail oil pricing system, China will announce the next price adjustment on Feb 27. Li predicted that prices will either rise again or remain unchanged.
However, Xu Ying, an oil product analyst at the consultancy, said there is still a big possibility that global crude prices will fall in the long term.
“Added to the fact that there is still a domestic oversupply in China, it is risky for traders to increase stocks at present,” she said.
Xue Qun, an analyst at the consultancy, said the price rises will increase costs for drivers fueling their vehicles for Spring Festival travel.
According to the consultancy, fuel costs for the logistics sector will increase by 90 yuan for each 1,000 km for large delivery trucks.
The price of US benchmark West Texas Intermediate crude for March delivery rose by 65 cents to $52.34, while Brent crude for delivery the same month rose by 35 cents to $58.15 in midmorning trade on Monday.
Last week, the price of West Texas Intermediate surged by 13.6 percent and Brent added 9.4 percent.
(China Daily 02/10/2015 page1)