Rate of Change Remains Negative; Retail Prices for Finished Fuels to Be Lowered This Round

August 26 News

The current round of China's refined oil price adjustment window will open at 24:00 on August 26. The retail price of refined oil in this round is about to decrease. In 2025, the retail price of refined oil has experienced six increases, six decreases, and four suspensions. During this cycle, the crude oil market has been fluctuating at a low level, and the crude oil change rate has remained negative. The adjustment of the retail price of refined oil in 2025 will see its "seventh" decrease.

As the current pricing cycle began, international oil prices remained volatile at low levels. By the 25th, the settlement price of the main U.S. WTI crude oil futures contract stood at $64.80 per barrel, while the benchmark Brent crude oil futures contract settled at $68.80 per barrel.

During this adjustment period, crude oil prices have generally fluctuated. On one hand, OPEC+ announced it would complete its cumulative production increase of 2.3 million barrels per day by September, signaling the group’s early exit from its over-2.2 million bpd cutback plan—one year ahead of schedule. This news weighed negatively on the oil market. On the other hand, escalating tensions in Europe and subsequent peace talks have eased geopolitical supply risks, while weak global macroeconomic data, coupled with expectations of a Federal Reserve rate cut in September, have further dampened bullish sentiment in the crude oil market.

By the 26th, the 10th working day of the cycle, the change rate for crude oil benchmarks reached -4.20%. As a result, gasoline prices in China are set to drop by 180 CNY per ton, while diesel prices will fall by 175 CNY per ton—equivalent to a reduction of 0.13 yuan per liter for 89-octane gasoline, 0.14 yuan for 92-octane, 0.15 yuan for 95-octane, and 0.15 yuan for No. 0 diesel. Consequently, retail prices for refined petroleum products will decline in this round.

Regarding gasoline: Recently, operating rates at independent refineries have remained relatively stable, with average utilization in Shandong refineries hovering around 52%. Meanwhile, the operating rate at major state-owned refineries nationwide has risen to approximately 84%, leading to a slight increase in refined oil supply from these smaller facilities. Meanwhile, residential travel and other activities have largely returned to normal, while the crude oil market has continued to experience volatility. As a result, the Chinese gasoline market has seen growing uncertainty, further dampening trading activity. Additionally, the rising adoption of new-energy vehicles is gradually curbing demand, causing gasoline prices to trend downward amid ongoing market fluctuations.

Regarding diesel: Recently, the supply side of the diesel market has remained stable, while demand has softened as China experiences increased rainy weather, leading to a slight decline in immediate end-user needs. Additionally, with the summer harvest now complete, agricultural fuel consumption has decreased compared to earlier periods. On top of this, diesel inventories stood at 1.1477 million tons in July, representing a month-on-month increase of 11.37%. Meanwhile, infrastructure and logistics sectors continue to operate fairly normally, resulting in low-level volatility in the diesel market.

Looking ahead: The peak season for traditional U.S. gasoline consumption is nearing its end, while supply-side risks remain unresolved. As a result, international oil prices are expected to fluctuate weakly in the short term, weakening cost support for China's refined oil market. In China, refinery operating rates are unlikely to change significantly in the near term, keeping the supply of refined fuels relatively ample. Combined with the lack of any substantial increase in gasoline demand, gasoline prices are likely to remain volatile and trend downward. Meanwhile, diesel demand has softened compared to earlier levels, suggesting that diesel prices may continue to hover at low levels in the coming period.