SunSirs: The Change Rate Remains Negative, and the Retail Price of Refined Oil Products will be Lowered in China

https://www.chemnet.com   Jun 13,2024 SunSirs

The window for this round of domestic refined oil price adjustment opened at 24:00 on June 13, and the retail price adjustment of refined oil is about to be lowered. The retail price in 2024 has gone through five increases, three decreases, and three runs, with the crude oil change rate remaining negative during the cycle. The retail price adjustment of refined oil in 2024 will encounter a "fourth" decline.

Entering this pricing cycle, the international oil price trend first fell and then rose. As of the 12th, the settlement price of the main contract for WTI crude oil futures in the United States was $78.50 per barrel, and the settlement price of the main contract for Brent crude oil futures was $82.60 per barrel. At the beginning of this cycle, crude oil has sharply declined. On the one hand, OPEC+, an oil producing country, has decided to gradually lift the voluntary deepening of production reduction space, which is expected to be a bearish supply for the oil market. On the other hand, the manufacturing PMI in May fell from 49.2 in April to 48.7, the lowest level in three months and the second consecutive month of decline. The weak data has intensified investor concerns about demand. However, in the later stage, the market generally hopes for an increase in summer demand for crude oil. With the arrival of the peak summer driving season, demand will become active, leading to a significant decrease in oil inventories, an increase in the trend of the crude oil market, and a reduction in the negative value of the crude oil change rate. As of the 13th, the change rate of crude oil varieties on the 10th working day was -3.81%, corresponding to a decrease of 190 RMB/ton for gasoline and 180 RMB/ton for diesel, with a price increase of 92# 0.15 RMB, 95# 0.15 RMB, and 0# 0.15 RMB.

In terms of gasoline: Recently, the maintenance equipment in Shandong has reduced production load, resulting in a decrease in the operating rate of Shandong refineries. The average operating rate of Shandong refineries has declined to around 52%, severely squeezing domestic refining profits, resulting in a significant decrease in profitability and a significant decrease in the enthusiasm of refineries to operate. The supply of refined oil has decreased, and the recent demand for gasoline has been average. Intermediaries are replenishing their inventory as needed, and the purchasing sentiment is average. The gasoline market is mainly volatile.

In terms of diesel: On the one hand, there has been a slight decrease in diesel supply, which has brought certain positive support to the diesel market; On the other hand, diesel prices have bottomed out, coupled with a decent downstream demand, the operating rate of outdoor projects is average, logistics and transportation are relatively normal, and diesel demand has not changed much. Recently, the diesel market has slightly increased.

Looking ahead, the crude oil market is intertwined with long and short positions, and the macro level is suppressed by the strong US dollar and high interest rates from the Federal Reserve. From a supply side perspective, although the OPEC+production reduction policy has not been effectively deepened, the control over the supply side in the medium to long term will still play a role. The main factor supporting oil prices will be the peak summer demand season, while Asian summer demand and North American driving season will play a role. The short-term trend of oil prices is relatively strong. From a domestic perspective, it is difficult to increase the operating rate of refineries in the short term, and the travel of residents is normal. With the rise of temperature, the use of oil has increased. Overall, there is not much change in gasoline supply and demand, and the gasoline market is mainly volatile; There is not much change in the supply and demand of the diesel market, with wholesale diesel prices hitting bottom and refinery profits being squeezed. There is also a slight upward trend in the later stage.

If you have any questions, please feel free to contact SunSirs with support@sunsirs.com.

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