Possible Oil Price Hike in China Triggered by Increased Crude Oil Prices
The rise in crude oil prices that serves as the basis of diesel and gasoline costs in China has reached a high point of 4% according to an industry estimate. This suggests that Beijing may possibly increase oil prices after its previous hike in April.
According to a recently published C1 Energy report, Brent, Cinta and Dubai’s latest weighted moving mean price was 4.1% higher than its October 7 level when China made its latest adjustments to oil prices
China is improving its current crude scheme so that it can better show refining prices with possible plans of shortening the period of adjustment from the present 22 working days. Moreover, it is also for the purpose of changing the component of the crude basket in which fuel prices are associated.
The government may launch the recent scheme within the first semester of this year after it missed its previous timeline that was expected by the industry at the end of 2011.
But, the estimate of the C1 may be a little varied to the calculations of the NDRC or the National Development and Reform Commission that establishes oil prices for the top 2 biggest consuming nation worldwide.
The NDRC may opt to withhold increases in gasoline prices which are almost close to a record breaking high.
According to Sinopec Corp’s marketing official, the government may not possibly increase current crude oil prices before February 6 which is the end of the New Year festivities.
The NDRC has yet to decide on what particular kind of crude oil to classify since the pricing formula was introduced in the beginning of 2009.
The NDRC said that the government is thinking of changing oil prices if the moving average for 22 days increases or decreases by 4 percent on top of other factors like inflation, demand and fuel supply.
China reduced oil prices for diesel and gasoline by around 3% last October 9.