September Petrochemical Prices for Gasoline and Diesel Mostly Fluctuate

September 29, News

According to the commodity market analysis system, the prices of gasoline and diesel from Shandong local refineries in September were mainly fluctuating. By the end of the month, the price of 92# gasoline in China was 7,594.33 CNY per ton, with a decrease of 0.48% in September; the price of 0# diesel in China was 6,599.17 CNY per ton, showing an increase of 1.41%.

Cost Perspective: Crude Oil Prices Fluctuate, Driving Changes in Refined Oil Products

Crude oil market prices have been experiencing significant volatility. As of the 26th, the settlement price for the November WTI crude oil futures contract in the U.S. was $65.72 per barrel, while the December Brent crude oil futures contract settled at $69.22 per barrel. The crude oil market is being influenced by a mix of bullish and bearish factors: on one hand, geopolitical tensions remain a key driver, with the Russia-Ukraine situation continuing to push oil prices higher. Additionally, the Federal Reserve’s interest rate cut has provided a positive boost to the global oil market, further supporting upward price movements. On the other hand, Saudi Arabia may increase its crude production, U.S. crude inventories are rising, and the peak driving season in the U.S. is coming to an end. Combined with a cautious outlook on the global economy and tepid demand for petroleum products, these factors are putting downward pressure on crude oil prices. As a result, crude oil price fluctuations are directly impacting China’s refined oil market, leading to volatile pricing trends for gasoline and diesel in the country.

Supply side: The start-up rate of Shandong local refineries has increased, leading to an increase in the supply of refined oil products.

Recently, some independent refineries have increased their operating rates, leading to a slight rise in overall refinery utilization. In Shandong, the average operating rate among local refineries stands at around 54.5%, while major refineries nationwide continue to run at approximately 85%. Meanwhile, supply of refined oil products from independent refineries has edged up slightly, with gasoline and diesel supplies in Shandong showing a modest increase compared to earlier levels. However, market prices for gasoline and diesel in Shandong remain stuck in a narrow trading range at lower levels.

Demand Side: Demand Has Increased, Driving Slight Gains Across Gasoline and Diesel Markets

In terms of gasoline, during the early to mid-September, residents' activities such as travel were mainly normal. Coupled with the recent fluctuations in the crude oil market, the atmosphere of waiting and watching in China's gasoline market has intensified, leading to a further decline in transactions. Additionally, the continuous increase in the popularity of new energy vehicles has led to demand not meeting expectations, causing the gasoline market to mainly experience a downward trend. In the latter part of the month, due to the approaching National Day holiday, intermediaries have become more active in purchasing, resulting in a slight rise in the gasoline market.

Regarding diesel, the recent increase in rainy weather has somewhat reduced the rigid demand at the terminal level. However, with the gradual start of the autumn harvest in September, the consumption of agricultural fuel has increased compared to before. The infrastructure and logistics sectors have remained relatively stable. After entering September, the end of the fishing ban in the north has led to an increase in marine fuel usage, contributing to a slight rise in the diesel market.

Market Forecast: With the recent end of the peak season for traditional U.S. fuel consumption, supply-side risks remain unresolved amid ongoing tensions between Russia and Ukraine. As a result, international oil prices are expected to stay strong in the short term, boosting cost support in China's refined oil market. In China, refinery operating rates are set to continue rising in the near term, ensuring ample supplies of refined fuels. Meanwhile, gasoline demand is likely to see a modest uptick, supported by the upcoming holiday period, potentially driving gasoline prices slightly higher. On the other hand, diesel demand has already shown signs of improvement compared to earlier levels, suggesting that diesel prices may also climb in the coming weeks.