Crude oil prices decline, leading to a reduction in this round of retail fuel prices in China

December 22 news

The latest round of China's refined oil price adjustment window opened at 24:00 on December 22. In this round, the retail price of refined oil was reduced again. In 2025, the retail price of refined oil has experienced seven increases, eleven decreases, and six suspensions. During this cycle, crude oil prices have fallen, and the crude oil change rate has remained negative, leading to the "twelfth" decrease in the retail price of refined oil in 2025.

Entering this pricing cycle, international oil prices have shown a downward trend. As of the 19th, the settlement price for the February contract of U.S. WTI crude oil futures stood at $56.52 per barrel, while the settlement price for the February contract of Brent crude oil futures was $60.47 per barrel. Throughout this pricing cycle, crude oil prices generally declined. At the beginning of the cycle, regional tensions eased somewhat, reducing the geopolitical risk premium. Additionally, weakening U.S. demand and ongoing U.S. tariff issues weighing on the global economy and demand expectations contributed to the downward trend in international oil prices. Although later on, heightened geopolitical tensions in Venezuela led to a rebound in crude oil prices, overall, crude oil prices continued to show a downward trend. As of the 22nd, the 10th working day, the rate of change for crude oil varieties was -3.51%, corresponding to a reduction of RMB 170 per ton for gasoline and RMB 165 per ton for diesel in China. This translates into a reduction of RMB 0.12 per liter for No. 89 gasoline, RMB 0.13 per liter for No. 92 gasoline, RMB 0.14 per liter for No. 95 gasoline, and RMB 0.14 per liter for No. 0 diesel.

Gasoline: Shandong independent refineries are operating relatively stably, with an average operating rate of around 52%. Recently, the main refineries across China have seen an increase in load reductions, leading to a slight decline in operating rates and causing inventory levels at some units to be low. Resident activities such as travel have been mainly normal, but with the drop in temperatures, the use of private cars has increased, ensuring a certain level of demand for gasoline in China. However, the increasing popularity of new energy vehicles has led to demand not meeting expectations, making the gasoline market more resilient to price declines.

Diesel: Recently, the diesel market supply in China has been normal, with demand mainly driven by essential needs. The recent increase in low temperatures and snowy weather in northern China has hindered diesel use in infrastructure and logistics transportation. Additionally, the use of diesel in agriculture has come to a pause. As a result, the recent demand for diesel has decreased compared to before, leading to a continuous decline in the diesel market.

Looking ahead: The recent oversupply of crude oil is unstoppable. Concerns over a reduction in crude oil supply due to geopolitical issues continue to support oil prices. However, there is no improvement in crude oil demand. Overall, international oil prices are expected to be weak and volatile in the short term, providing limited cost support to China's refined oil market. In the short term, the operating rates of refineries in China are relatively stable, with ample supply of refined oil. Additionally, bearish news may limit market sentiment. As the impact of rainy and snowy weather expands, the expected rigid demand for diesel is being suppressed, leading to a weakening trend in diesel prices. On the other hand, gasoline demand still has some support, making it more resilient to price declines.