Singapore (Platts)--15Nov2012/341 am EST/841 GMT
China is considering adjusting the retail prices of gasoil and gasoline even when the benchmark crude prices fluctuate within 4% under a newly submitted proposal to the State Council, local newspaper 21st Century Business Herald reported Wednesday, citing an expert close to the National Development and Reform Commission. Since May 2009, the NDRC has used a system under which it considers adjusting mandated retail prices for gasoline and gasoil whenever the rolling 22-day average of a crude basket rises or falls by at least 4%. The NDRC refers to the prices of a basket of crude oils -- Brent, Dubai and Cinta -- when recommending an adjustment, which is then approved by the government. Compared with the widespread speculation concerning the new pricing system which circulated in the market earlier this year, the new proposal suggests removing the 4% restriction on the price fluctuation of a crude basket. "The new pricing system aims to shorten the adjustment period and let oil companies set oil product prices by themselves," the expert was quoted as saying.Article continues below...Request a free trial of: Oilgram NewsOilgram News brings fast-breaking global petroleum and gas news to your desktop every day. Our extensive global network of correspondents report on supply and demand trends, corporate news, government actions, exploration, technology, and much more.
China is considering adjusting the retail prices of gasoil and gasoline even when the benchmark crude prices fluctuate within 4% under a newly submitted proposal to the State Council, local newspaper 21st Century Business Herald reported Wednesday, citing an expert close to the National Development and Reform Commission. Since May 2009, the NDRC has used a system under which it considers adjusting mandated retail prices for gasoline and gasoil whenever the rolling 22-day average of a crude basket rises or falls by at least 4%. The NDRC refers to the prices of a basket of crude oils -- Brent, Dubai and Cinta -- when recommending an adjustment, which is then approved by the government. Compared with the widespread speculation concerning the new pricing system which circulated in the market earlier this year, the new proposal suggests removing the 4% restriction on the price fluctuation of a crude basket. "The new pricing system aims to shorten the adjustment period and let oil companies set oil product prices by themselves," the expert was quoted as saying.
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The newspaper said the proposal also recommends shortening the price adjustment period for oil products to 10 days from the current 22 days, and replaces Indonesian Cinta benchmark in the basket of crudes with WTI, which has been widely discussed. "Under the new pricing mechanism, the NDRC will not announce every price change on oil products when the basket crude price is between $40/mt and $130/mt, and let oil companies adjust their prices according to the new regulations," he said. The current oil pricing system had maintained stability in domestic oil markets but it has some drawbacks. It resulted in hoarding and caused supply to become tight when crude prices rose sharply, as the current adjustment period was long, market sources said. Since the start of the pricing mechanism, the NDRC has raised the prices of gasoline and gasoil 13 times and lowered prices seven times in four years. As of Wednesday, the weighted 22-day rolling average of the basket of crudes -- Brent, Dubai and Cinta -- has fallen by around 4.2% since September 7, when the condition for the last price adjustment was met, Platts data showed.--Staff, newsdesk@platts.com --Edited by Jonathan Fox, jonathan_fox@platts.com
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