Crude Oil Prices Decline, Local Refinery Gasoline and Diesel Prices Fall in China

August 8th, news:

According to the commodity market analysis system, in early August, the prices of gasoline and diesel from Shandong independent refineries mainly decreased. As of the 9th, the price of China's 92# gasoline was 7856.17 CNY/ton, a decrease of 1.05% from early August; the price of China's 0# diesel was 6668.33 CNY/ton, a decrease of 1.59%.

Cost aspect: As crude oil prices decline, refined oil products in China also decrease.

The crude oil market is mainly experiencing a decline in prices. As of the 7th, the settlement price for August WTI crude oil futures in the U.S. was reported at $63.88 per barrel, while the settlement price for August Brent crude oil futures was $66.43 per barrel. Negative factors affecting the crude oil market include OPEC+'s announcement that it will complete cumulative production increases of 2.3 million barrels per day by September, marking its early exit from the over-2.2 million barrels per day production cut plan implemented a year ahead of schedule. This news has been bearish for the oil market. Additionally, geopolitical tensions in the Middle East continue to impact the oil market, and negative global macroeconomic data combined with the approaching off-season demand in the U.S. have further pressured crude oil prices. The crude oil market directly influences China's refined oil market, leading to a downward trend in China's gasoline and diesel prices.

Supply Side: Shandong Independent Refineries Operating Normally, Minimal Changes in Refined Oil Products

Recent changes in the operating rates of local refineries have been minimal, with the average operating rate of Shandong's local refineries remaining around 52%. The operating rates of major refineries across China have increased to around 84%, leading to a slight increase in the supply of refined oil products from local refineries. However, as Shandong's local refineries have maintained a relatively low operating rate, this has provided some support to the refined oil market, with the supply of gasoline and diesel in Shandong remaining largely unchanged.

Demand Side: Mainly Rigid Demand, Overall Gasoline and Diesel Prices Decline

Regarding gasoline, recent activities such as residents' travel have been relatively normal. Coupled with the volatile crude oil market recently, the Chinese gasoline market has become more cautious, further weakening transactions. Additionally, the increasing popularity of new energy vehicles has led to weaker-than-expected demand, causing gasoline prices to generally fluctuate downward. As for diesel, increased rainy weather recently has reduced terminal demand for essential supplies. With the end of summer harvest, agricultural fuel consumption has decreased compared to previous periods. Moreover, diesel inventory reached 1.1477 million tons in July, an increase of 11.37% from the previous month. Meanwhile, infrastructure and logistics sectors remain relatively stable, resulting in a downward trend in the diesel market.

Future market forecast: In the near term, bearish factors will dominate. The traditional peak season for U.S. conventional fuel consumption is about to end, and risks on the supply side have not been eliminated. As a result, international oil prices are expected to remain weak in the short term, weakening cost support for China's refined oil market. In China, refinery operating rates have slightly increased in the short term, leading to an ample supply of refined oil products. Coupled with no significant increase in gasoline demand, gasoline prices are likely to fluctuate downward. Meanwhile, diesel demand has declined compared to previous levels, and diesel prices may continue to fall in the future.