As calculated by Jinlianchuang, the average price of reference crude oil was US $40.74 / barrel as of the first pricing day on November 6, with a change rate of 2.45%, and the retail price of the corresponding gasoline and diesel oil should be increased by RMB60 / ton. By the end of the pricing period on November 19, the domestic retail price of refined oil products is expected to be slightly increased or grounded, with the expected increase rate of about 70 yuan/ton.
Entering November, there are altogether two price adjustment window periods for domestic retail oil products, namely November 5 and November 19.
In the pricing cycle on November 5, the international oil price was affected by the coVID-19 outbreak in Europe and the United States. The price of WTI futures dropped from us $40.64 / BBL at the beginning of the pricing period to as low as US $35.79 / BBL. As a result, the average price of dependent oil also shrank rapidly, from $42.20 per barrel at the beginning of the period to $39.77 at the end of the period.
Since the average price fell below $40 per barrel, the "floor price" protection mechanism was activated. In other words, the retail price of gasoline and diesel was only adjusted above $40 per barrel, and the corresponding price was lowered by 160 yuan per ton and 150 yuan per ton respectively. Equivalent to 89# gasoline reduced 0.12 yuan/l, 92# gasoline reduced 0.13 yuan/l, 0# diesel reduced 0.13 yuan/l.
Entering the Nov.19 pricing cycle, the average first-day dependent oil price is expected to climb back above $40 a barrel on the back of positive U.S. crude inventory data. As calculated by Jinlianchuang, the average price of reference crude oil is US $40.74 / barrel as of the first pricing day on November 6, with a change rate of 2.45%, and the retail price of the corresponding gasoline and diesel oil should be increased by RMB60 / ton.
By the end of November and early December, when OPEC+ meets formally on a semi-annual basis, the agreement is likely to be extended until the first quarter of 2021, according to OPEC and Russia. If the agreement is finally implemented, international oil prices are expected to rebound in a small range from late November. Driven by this good news, domestic oil product retail price is also expected to continue to increase slightly at the end of the pricing period ended December 3.
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