Gas price hike likely: analysts

By Chen Xiaomin

Analysts said the price of crude oil in the coming week will determine whether retail fuel prices will be adjusted by the National Development and Reform Commission (NDRC) on October 30.

Under China's refined oil pricing mechanism adopted earlier this year, NDRC is to adjust domestic fuel prices when global crude oil prices, a basket of international crude (Brent, Dubai and Cinta), report a daily fluctuation band of more than four percent over 22 straight working days.

The next 22nd working day is October 30.

Figures from CBI China, a domestic commodity information provider showed that as of October 19 the moving average of crude prices in Brent, Dubai and Cinta went up by 0.99 percent over 22 consecutive working days.

Analysts said the moving average is likely to touch four percent if global crude oil prices stay high.

Benchmark crude oil prices are back around $80 a barrel last week on the New York Mercantile Exchange for the first time in nearly a year, surging 14 percent from less than $70 per barrel at the beginning of the month.

"If global crude oil keeps rising over the next week, the growth rate will be more than four percent," chief analyst Zhong Jian of oilgas.com.cn told the Global Times, predicting an increase of domestic fuel prices by 300 to 400 yuan ($43.94 to $58.58) per ton.

Oil analyst Zhang Yongkai of JYD Commodities Hub, a commodities information and e-trading service provider, was even more certain about global crude oil prices in the coming week.

"NDRC will undoubtedly raise fuel prices this time, but they won't let the hike surpass 600 yuan ($87.87), the highest increase of the year put into effect on June 30," Zhang told the Global Times on Sunday, adding the possible rise will range from 400 to 500 yuan ($58.58 to $73.23).

China is the world's second largest consumer of oil after the US, and its crude oil imports have topped 16 million tons for seven months in a row since March. It imported 17.2 million tons of crude oil in September, over 14 percent more than the same time last year.

Lawrence Neal, president of Platts, a world leading provider of energy and metals information, told the Global times last week that the recent pickup in oil prices was not caused by strong fundamentals but by the weak dollar, gains in the stock market, and positive reports on the speed and strength of the recovery.

He said if the price goes too high it could have a negative impact on the economy.

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