CNPC to Extend Halt in Diesel Exports; Raise Imports (Update1)
bloomberg.com
By Wang Ying
June 4 (Bloomberg) -- China National Petroleum Corp., the country's biggest oil producer, said it will extend a halt in diesel exports and increase inward shipments of fuels to ease a shortage in China.
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Asia Fuel-Price Hikes Won't Curb Demand, Goldman Says (Update1)
bloomberg.com
By Christian Schmollinger
June 4 (Bloomberg) -- Fuel-price increases in Asian countries such as Sri Lanka, Indonesia and Malaysia are too miniscule to have a ``meaningful' impact on global oil demand growth, Goldman Sachs Group Inc. said.
The aggregate impact of price-increases in Indonesia, Sri Lanka, Pakistan, Taiwan, as well as Egypt, Russia, Jordan and Syria, would cut world consumption growth by just 17,000 barrels a day, according to a Goldman report dated yesterday.
Indonesia, Taiwan, Sri Lanka and Pakistan are raising fuel prices as the cost of subsidies mounts. Malaysia will end price controls on gasoline to avoid paying 55 billion ringgit ($17 billion) in subsidies, a minister said yesterday. The countries only represented about 4 percent of global consumption in 2006, according to the BP Statistical Review of Energy.
``Most countries that recently cut subsidies do not represent a significant share of global demand, so increasing fuel prices in these regions will likely have a limited impact on average global demand growth for 2008,' analysts led by Samantha Dart and Jeffery Currie said in the report.
Even if demand in the countries that have raised fuel costs is twice as sensitive to price changes, growth would only be cut by 35,000 barrels a day, said Goldman.
Price increases in China, which accounts for 9 percent of total oil demand, according to Goldman, would have a larger impact on consumption. A change in Chinese levels would lower Asian usage by 30,000 barrels a day for the rest of 2008, the report said.
China has made no announcements that it will reduce cut. In April, the government paid about 7 billion yuan ($1 billion) to cover refining losses at China Petroleum and Chemical Corp., Asia's largest oil refiner.
China Subsidies
Without China cutting fuel subsidies, there will be very little global impact on oil demand from the price increases by the other Asian countries, said Victor Shum, senior principal at consultants Purvin & Gertz Inc. in Singapore.
``There is some talk about them doing something after the Olympics but I have my doubts about that,' said Shum. ``Inflation is at a 12-year high and even after the Olympics, I don't think the government will raise prices.'
Goldman finds Chinese prices have eventually caught up with higher international levels. Current domestic fuel costs are based on crude oil at $90 a barrel, where benchmarks West Texas Intermediate or Dubai traded in February, the report said.
``We believe that Chinese fuel prices will eventually catch up with market price levels,' said Dart and Currie.
India Raises Prices
India today raised retail fuel prices and cut taxes to reduce more than $50 billion of losses at refiners. Prices of gasoline, diesel and cooking gas will be increased from midnight, Oil Minister Murli Deora told reporters in the capital.
Still, the measures will only narrow refiners' losses by about $10 billion, Oil Secretary M.S. Srinivasan said, or less than a fifth of the shortfall this year.
Gasoline prices will be raised by 5 rupees a liter and diesel by 3 rupees, the minister said. Liquefied petroleum gas will be increased by 50 rupees for a 14.2 kilogram bottle.
Duties on gasoline and diesel were cut to 2.5 percent from 7.5 percent and on other oil products to 5 percent from 10 percent. The 5 percent import duty on crude oil was scrapped.
The Goldman report, which was released before the price increase, said India's significance for changes in world oil demand growth is limited.
``Even India, one of the main contributors to demand growth, only accounts for 3 percent of global demand,' said the report.
A projected 25 percent change, or the difference between government-set levels and market-based prices, in Indian fuel costs would only reduce local consumption by 6,000 barrels a day, they said.
To contact the reporter on this story: Christian Schmollinger in Singapore at Christian.s@bloomberg.net.
Last Updated: June 4, 2008 08:06 EDT
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China oil majors to tap other refiners, halt exports to ensure fuel supply
06.03.08, 4:10 AM ET
forbes.com
BEIJING (XFN-ASIA) - China's two state-run oil majors, China National Petroleum Corp(CNPC) and Sinopec Group, said they will tap capacity at other refiners, halt fuel exports and increase imports to meet demand projected for the summer peak consumption period and the Beijing Olympics.
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China Stockpiles Before Olympics Push Diesel Prices, WSJ Says
bloomberg.com
By Joseph Galante
May 19 (Bloomberg) -- China is pushing the price of diesel fuel higher by stockpiling it ahead of both the Summer Olympics and the need to rebuild Sichuan province after last week's earthquake, the Wall Street Journal reported.
The country is hoarding the fuel in the event that its power grid fails and it needs to use backup generators, the Journal said.
Low inventories in Europe are also pressuring diesel prices, which have risen 53 percent in the last year in the U.S. compared with a 20-percent increase in gasoline, according to the report.
For the first time, the U.S. is playing a key role in supplying the world with the fuel, the Journal said. Indonesia and the United Arab Emirates have said they will boost diesel imports because of domestic shortages, the newspaper added.
To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net.
Last Updated: May 19, 2008 00:59 EDT
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Is Oil the Next 'Bubble' to Pop?
By GUY CHAZAN and NEIL KING JR.
June 4, 2008; Page C6
online.wsj.com
Excerpt:
China's Needs
Rocked by the recent earthquake, China is now scrounging for all available sources of diesel to power thousands of generators that have taken the place of downed power plants. Surging domestic demand among Persian Gulf countries also continues to nibble away at available oil exports.
"What will turn this around is a real change in what has pushed this up in the first place, which would be a notable shift on the supply-demand front," said Mr. Horsnell. "So far, we aren't seeing that."
Lehman is in the camp that expects the supply-demand balance to change in the coming months. New Saudi oil production should come onstream soon, as well as big new refineries that will ease bottlenecks and bring greater competition in oil-products markets. Russia is enacting tax breaks that many hope will lift stagnant oil production.
Meanwhile, oil-demand growth is expected to ease in fuel-hungry China, as the economic slowdown in its Western export markets takes hold. China also has been stockpiling fuel in the run-up to the Olympics, and with the Games over, imports might slow.
All this could "set the stage for a significant correction" in the oil price, says Michael Waldron, an analyst with Lehman. Yet even he predicts that may not happen before the end of the year.
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Diesel Prices Soar Ahead of Olympics
By Anna Raff
online.wsj.com
Ahead of the summer driving season, all eyes are usually on gasoline. This year, it's diesel that's going for a ride.
The rise of diesel, and more broadly, the category of fuel known as middle distillates, is driven by stockpiling in China ahead of the Olympic Games in August and the prospect of even more fuel needed to aid the rebuilding effort in Sichuan province after last week's destructive earthquake.
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IMHO, we will have to see China stop stockpiling for the Olympic Games before we see a significant break in diesel prices and for the Olympics to end and the foreign camera crews go home before the Chinese jack up retail prices and put a brake on consumption.
Price increases in pip-squeek economies, like Sri Lanka, won't significantly curb Global demand. China is the Asian demand elephant, Sri Lanka the mouse. |
