Crude oil remains in negative territory, another round of retail fuel price cuts in China

December 08 news

The latest round of adjustments to China's refined oil prices took effect at 24:00 on December 8. In this round, the retail price of refined oil was reduced again. In 2025, the retail price of refined oil in China has experienced seven increases, ten decreases, and six suspensions. During this cycle, the crude oil market first fell and then rose, narrowing the negative value of the crude oil change rate. This marks the "eleventh" decrease in the retail price of refined oil in China for 2025.

Entering this pricing cycle, international oil prices have been fluctuating at low levels. As of the 5th, the settlement price for the January WTI crude oil futures contract stood at $60.08 per barrel, while the settlement price for the February Brent crude oil futures contract was $63.75 per barrel. During this pricing cycle, crude oil prices initially fell and then rebounded. At the beginning of the cycle, regional tensions eased somewhat; meanwhile, weakening U.S. demand and lingering U.S. tariff issues weighed on global economic growth and demand expectations, keeping international oil prices at low levels. Later in the cycle, OPEC+ oil-producing countries temporarily slowed down their production increases, and with the prospects for a geopolitical peace agreement remaining slim, geopolitical factors drove crude oil prices higher. As of the 8th, on the 10th working day, the rate of change for crude oil varieties was -1.20%, corresponding to a reduction of 55 CNY per ton for gasoline and 55 CNY per ton for diesel in China. This translates into a reduction of 0.04 yuan per liter for 89# gasoline, 0.04 yuan per liter for 92# gasoline, 0.04 yuan per liter for 95# gasoline, and 0.05 yuan per liter for #0 diesel.

Gasoline: The operation of Shandong independent refineries has been relatively stable, with the operating rate maintained and the average operating rate of Shandong independent refineries around 54%. Recently, major refineries across China have increased load reductions, leading to a slight decline in the operating rates, which has resulted in lower inventory levels for some units. Resident activities such as travel have been normal recently, but with the drop in temperature, the usage frequency of private cars has increased, leading to a rise in gasoline demand in China. However, the continuous increase in the adoption of electric vehicles has led to demand falling short of expectations, resulting in a slight increase in gasoline prices.

In terms of diesel: Recently, the supply side of the diesel market in China has been normal. Demand is still mainly driven by essential needs. The recent increase in cold and snowy weather in northern China has led to disruptions in diesel usage for infrastructure and logistics transportation. Additionally, the use of diesel in agriculture has come to a pause. As a result, the demand for diesel has decreased compared to before, leading to a slight decline in the diesel market.

Looking ahead, the risks on the crude oil supply side have not yet been eliminated. Concerns about reduced crude oil supplies due to heightened geopolitical tensions continue to provide support for oil prices. However, demand for crude oil remains sluggish. Overall, international oil prices are expected to remain weak and volatile in the short term, with limited cost support for China’s refined oil market. In China, refinery operating rates have remained relatively stable in the short term, resulting in a relaxed supply of refined oil products. Moreover, market sentiment is skewed toward the bearish side, partly influenced by negative news. As winter approaches and its impact intensifies, demand for diesel—driven by essential needs—is expected to weaken. On the other hand, gasoline demand has shown some improvement, making gasoline more resilient to price declines.