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China likely to raise fuel prices this month

08-01-2012 22:28 BJT

BEIJING, Aug. 1 (Xinhua) -- China is likely to raise its gasoline and diesel prices this month after three consecutive cuts this year, as the international crude oil prices to which China's prices are pegged have increased.

Data from a monitoring system run by the Xinhua News Agency showed that as of Monday, the basket of crude oil prices used to calculate China's own fuel prices went up by an average of 4.41 percent since its previous adjustment last month.

The moving rate calculated by Oilchem.net and Chem99.com, two major oil industry service providers, came in at 4.45 percent and 4.47 percent, respectively.

China adopted an oil pricing mechanism in 2009 that allows China's top economic planner, the National Development and Reform Commission (NDRC), to adjust retail fuel prices when international crude oil prices change by more than 4 percent over 22 working days.

China's previous adjustment fell on July 11, when the NDRC slashed the price of gasoline by 420 yuan (66.7 U.S. dollars) per tonne and that of diesel by 400 yuan per tonne.

"Aug. 9 will be the 22nd working day. If international crude oil prices keep fluctuating, the cumulative change is likely to amount to 6 percent to 7 percent," said Chen Qing, an analyst with Chem99.com.

In that scenario, the NDRC will likely to raise fuel prices by 350 yuan per tonne, she said.

But given the NDRC's propensity to postpone adjustments over inflation and living cost considerations, a price hike announcement might come later than expected, Chen noted.

Although there is a high possibility of a price hike, analysts said uncertainties still exist due to constant fluctuations on the market.

Cheng Ruifeng, an analyst with Oilgas.com, said oil prices are likely to plunge on negative news from the debt-ridden eurozone, and if so, a price hike in China is unlikely in the short term.

Editor:Zheng Limin |Source: Xinhua

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