China may possibly Reduce Fuel Costs in October

China, the second largest consumer of oil worldwide, may reduce prices for diesel and gasoline this month, with expectations that global per barrel crude oil prices will decrease.

Based on the pricing mechanism for China’s oil-based commodities set since 2009, the country will alter the cost of refined oil products when the commodity’s international weighted average price changes by at least four percent for 22 consecutive working days. The government’s reference blends are Brent North Sea, Cinta and Dubai crudes.

Figures released by a primary service provider in the oil industry recently showed that the basket of Dubai, Cinta and Brent had an average fall of 1.86 percent since a prior adjustment in the past month.

According to analysts, per barrel crude oil prices will probably post further reductions as worries about weak growth in the global economy weigh it down.

In case current crude prices keep their downward trend, the changing rates may shift beyond the window of 4 percent, according to a report in the Global Times, another service provider in the oil industry. Zhu Chunkai, a Chinese commodities analyst, said that the pricing mechanism will begin to take effect on the 18th of October.

The last adjustment on the retail prices of fuel made by the second biggest economy of the world was on the 11th of September. At that time, the government increased the retail costs of fuel for the second time in almost a month following persistent increase in global crude oil prices.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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