As of 12:00 AM on October 24, a new round of domestic fuel price adjustments will take place in China. According to various institutions, it’s highly likely that there will be an increase in retail fuel prices this time.

During the current pricing cycle, international oil prices experienced fluctuations, initially rising due to escalating tensions in the Middle East, which saw Brent crude prices climb above $80. However, news suggesting a de-escalation in the region led to a swift decline as market fears over potential conflicts and oil supply disruptions eased, compounded by decreasing demand expectations.

According to Longzhong Information, as of October 21, the average reference crude oil price during this cycle was $74.79 per barrel, marking a 1.82% increase from the previous cycle. Consequently, the price adjustment on October 24 is expected to see gasoline and diesel prices rise by approximately 85 yuan per ton. For a standard 70-liter tank, private car owners would spend about 4 yuan more to fill up.

This year, domestic fuel prices have undergone twenty rounds of adjustments, resulting in eight increases, eight decreases, and four instances where prices remained unchanged. After accounting for these fluctuations, gasoline and diesel prices are down by 75 yuan and 70 yuan per ton, respectively, compared to the end of last year. If this latest increase goes through, the pattern for 2024 will change to nine increases, eight decreases, and four instances of stasis.

In Shandong province, Longzhong noted that the prices at Sinopec gas stations for 92# and 95# gasoline are currently at 7.45 and 7.99 yuan per liter, respectively. With the expected rise in retail prices, private car owners are encouraged to fill up their tanks in advance. From a wholesale perspective, prices have been trending down during this cycle, leading to lower procurement costs for gas stations and thus higher profits.

Following the “10 working days” principle, the next window for fuel price adjustments will open at 12:00 AM on November 6, 2024.

Looking ahead, Jinlianchuang has noted a downtrend in global oil demand expectations from three major energy organizations, creating a negative sentiment in the oil market. Additionally, ongoing geopolitical tensions in the Middle East add to the uncertainty. Overall, given the weak fundamentals, international oil prices could still have room for further declines.

Longzhong also pointed out that OPEC+ continues its production cuts, with several oil-producing countries expressing support for these actions. However, the easing tensions in the Middle East persist under pressure from demand-side factors. Thus, the likelihood of a decrease in fuel prices in the next round of adjustments seems considerable.

(Please note that the opinions expressed herein are for reference purposes only and do not constitute investment advice. Investing carries risks, and caution is advised.)