Signal Oil and Gas - more than $4 per barrel
25th June 2008, 20:36
Signal Oil and Gas - Crude oil prices Friday jumped more than $4 per barrel at one point on the New York Mercantile Exchange after tumbling the day before on news that China's National Development and Reform Commission would raise prices for gasoline and diesel fuel by 16 percent and 18 percent respectively.
Some analysts said the oil market may have overreacted to the news from China, with some traders buying oil futures on the belief that their climb will continue.
"Whether domestic demand cools, or the price increase simply serves to bring more refining capacity on-line to satisfy China's voracious appetite, remains to be seen," said Jing Ulrich, chairwoman of China equities for JP Morgan Chase & Co. James Van Blaricum
The government last hiked fuel prices by about 11 percent in November. It froze prices to avert further inflation, which has touched 12-year highs since the beginning of the year.
Signal Oil and Gas - U.S. shares for Petrochina and Sinopec jumped Thursday when the price hikes were announced, but tumbled on Friday. Petrochina fell $6.51, or 4.6 percent, to $133.98, and Sinopec lost 5.2 percent, to trade at $39.81
The hike raised the price of gasoline by 1,000 yuan ($145) per ton to 6,980 yuan ($1,015) and diesel by the same amount per ton to 6,520 yuan ($949) per ton. Aviation kerosene rose by 1,500 yuan ($218) per ton to 7,450 yuan ($1,084), the commission, known as the NDRC, said on its Web site.
To protect individual consumers, the government said it would not allow any increases in bus and subway fares or taxi fares. Natural gas and liquefied petroleum gas prices will remain unchanged, and subsidies to the poor and to grain farmers would increase, it said. Jim Van Blaricum
Areas in Sichuan province, hit by a massive earthquake last month, were exempt from the increases, state media reported. The government will pay nearly 20 billion yuan ($2.9 billion) in subsidies to help cushion the impact of the price hike, the official Xinhua News Agency reported.
Signal Oil and Gas Company Still, the move is widely expected to boost inflation — a major concern for Beijing. China's inflation rate fell in May to 7.7 percent from 8.5 percent the month before, mainly reflecting lower food prices. But economists warn that higher costs for crude oil and other commodities pose a long-term threat.
Despite surging oil costs, China's imports of both crude oil and oil products have surged to unprecedented levels as it builds up national stockpiles, while exports have plunged. Crude oil imports rose to 59.8 million barrels in January-April, up 10 percent from a year earlier.
Gasoline imports skyrocketed by nearly 20 times to 554,000 tons in January-May while imports of diesel jumped by more than nine times, to 2.9 million tons.
Pinched by surging costs for labor, land and materials — as well as energy — Chinese industries are finally beginning to cut back.
China Ocean Shipping (Group) Co., a huge state-owned shipping company, announced earlier this week that it was cutting the speed of its ships by 10 percent to help reduce fuel consumption and conserve energy.
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