China’s Domestic Oil Prices to be Cut
China is planning to cut domestic guide prices for diesel and gasoline in line with the drop in global crude prices. Retail prices will also be reduced by 100 yuan per ton and it would be the first cut since March and the fourth for this year.
Based on an announcement coming from the National Development and Reform Commission that China’s top economic regulator that the change will be expected by Monday and based on the oil pricing mechanism, oil prices can be changed every ten working days and there should be a substantial change in the global market price to do so. As crude prices fell last week, concerns of oversupply after the Organization of the Petroleum Exporting Countries decide to have a daily output at 30 million barrels in the next six months.
Last Saturday oil prices recovered to $6 a barrel after falling for three consecutive days and are lower that $65 per barrel that was seen in June crude prices increase since January’s bottom thus ending a six month long plunge from $105 a barrel a year ago. The possibility of a downturn which can be ruled out because of OPEC’s decision.