This Week, Local Refinery Gasoline and Diesel Prices Remain Sluggish in China (8.31-9.5)

September 05, News

According to the commodity market analysis system, the prices of gasoline and diesel from Shandong independent refineries mainly fluctuated downward this week. By the end of the week, the price of China's 92# gasoline was 7,626.33 CNY/ton, a decrease of 1.27%; the price of China's 0# diesel was 6,537.5 CNY/ton, a decrease of 0.56%.

Cost Aspect: Crude Oil Market Fluctuates, Refined Oil Products Follow Suit in China

Crude oil market prices have mostly fluctuated at low levels. As of the 4th, the settlement price for the October WTI crude oil futures contract in the U.S. was $63.48 per barrel, while the November Brent crude oil futures contract settled at $66.99 per barrel. The crude oil market is being influenced by a mix of bullish and bearish factors: on one hand, geopolitical issues remain a key driver, with the Russia-Ukraine situation continuing to push the market toward stronger pricing. On the other hand, concerns about Saudi Arabia potentially increasing production, rising U.S. crude oil inventories, and the end of the peak driving season in the U.S., coupled with a cautious outlook on global economic growth and oil demand, are putting downward pressure on crude oil prices. These dynamics directly impact China’s refined oil market, where gasoline and diesel prices remain subdued.

Supply Side: Increase in Shandong Independent Refinery Operations Leads to Higher Supply of Refined Oil Products

Recently, some local refining units in China have increased their operating loads, leading to a slight increase in the operating rate. The average operating rate of local refineries in Shandong is around 54%, while the operating rate of major refineries across China remains at about 85%. The supply of refined oil products from local refineries has slightly increased, and the supply of gasoline and diesel in Shandong has risen compared to before, resulting in a small decline in the prices of gasoline and diesel in Shandong.

Demand Side: Driven Primarily by Essential Needs; Overall Gasoline and Diesel Market Remains Low

In terms of gasoline, recent activity such as residential travel has remained largely normal, while the crude oil market has experienced significant volatility. As a result, the Chinese gasoline market has seen heightened cautiousness, leading to further sluggish trading. Additionally, the growing adoption of new-energy vehicles continues to dampen demand, causing gasoline prices to trend downward amid ongoing market uncertainty.

On the diesel front, recent rainy and overcast weather patterns have softened end-user demand, particularly for essential applications. Meanwhile, with the summer harvest winding down, agricultural fuel consumption has declined compared to earlier periods. However, infrastructure projects and logistics activities remain relatively stable. Notably, as the northern fishing ban concluded in early September, demand for marine diesel has picked up slightly. Overall, diesel prices have shown only modest declines recently.

Market Forecast: The upcoming peak season for traditional U.S. fuel consumption is nearing its end, yet 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 likely to continue rising in the near term, keeping the supply of refined products ample. Meanwhile, gasoline demand has shown no significant increase, leading to predominantly volatile and declining gasoline prices. On the other hand, diesel demand has picked up slightly compared to earlier levels, suggesting that diesel prices may experience mixed-to-volatile movements in the coming period.