China’s refined oil wholesale prices increased

PetroChina Co. Ltd. and China Petroleum and Chemical Corp. (Sinopec) jointly pushed up domestic refined oil wholesale prices in March, stimulating the arbitrage from diesel oil import. Sinopec plans to increase capital expenditure and production despite an expected slowdown in business. China’s gasoline and diesel imports will largely increase in May 2009 if the rising refined oil wholesale prices continue adding that some domestic regions may still face the high inventory pressure. Also, China has turned to a diesel oil net exporter since October 2008, but the domestic refined oil sales market is weak as before. The increase is the first time that fuel prices have been raised under the government’s new pricing system. The changes aimed for domestic fuel prices to better track international crude oil prices in an effort to protect the profit margins of domestic refiners. (March 30/ April 14, 2009)