Oil price plunges from high level, dealers worry to clear oil storage

Only one and a half months ago, product oil dealers in China were pondering how to fill their oil tanks, but now they are worrying over their remaining storages after international crude oil price plunged more than 10% since the beginning of July. It’s currently expected that the National Development and Reform Commission (NDRC) may cut the price of gasoline. Gasoline dealers busying themselves with attempts to clear their storages aren’t having much luck, said a manager of a private oil company in Zhejiang. This marks the second price war in Beijing’s product oil retail market, though the city certainly isn’t the most fiercely contested in China. An industry insider said that if the stored oil can’t be sold before the NDRC cuts gasoline prices, oil companies will lose hundreds of yuan for per ton of oil daily. Under China’s price change mechanism introduced last December, the NDRC may adjust fuel prices when crude prices change more than 4% over 22 straight working days. Deng Yusong, a senior analyst at the Development Research Center of the State Council, believes the price of product oil should line up with the international market. (July 15, 2009)