China Releasing Gasoline and Diesel Reserves to Stabilize Prices

China has reacted to the energy crisis to release both gasoline and diesel from it’s reserves to ease the supply crunch where CNOOC even made rare diesel imports. Sinopec and PetroChina pledged to ramp up output.

China has reacted to the energy crisis to release both gasoline and diesel from it’s reserves to ease the supply crunch where CNOOC even made rare diesel imports. Sinopec and PetroChina pledged to ramp up output.

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China in a rare public statement on Sunday through it’s National Food and Strategic Reserves Administration said it was releasing gasoline and diesel reserves to boost market supply and stabilise prices. Chinese refiners cut fuel output in the third quarter because of COVID-19 curbs and floods but diesel consumption rebounded, partly triggered by a widespread power crunch that caught the market by surprise.

China turned to be a net exporter of diesel and gasoline a number of years ago however cutting quotas for crude oil imports and refined fuel exports to a hefty import tax on a diesel blending component, tightened supplies of fuel, especially diesel.

The state reserves bureau said the rotation was an annual one, but did not disclose the volume released.

“The rotation of gasoline and diesel from storage this time will be used to increase market resources, ease supply tensions, and give play to the regulatory role of the national refined oil reserve market,” it said.

Sinopec Corp , Asia’s largest oil refiner, has said its refineries were running at full rates, with plans to raise diesel output by nearly half from January-August levels in November and December Its diesel output in September and October had already risen 20% month on month, the refiner told state television.

“We believe the tight diesel supplies in several regions are temporary and expect the situation to improve soon,” Ling Yiqun, a Sinopec vice president, was cited as saying.

State-run CNOOC imported 50,000 tonnes of diesel for delivery into the southern province of Guangdong, Reuters has reported.  With a planned output hike, Sinopec has no plans to import diesel for now, a trader with direct knowledge of the refiner’s fuel trades said

 Second-largest state refiner PetroChina  told state television it had boosted its imports of crude oil by 10% year-on-year in October and ramped up diesel supply by 23%.

“Considering the demand downside from the current COVID-19 resurgence and the upcoming winter, the need for significant stocks release is limited,” Geng added.

 Wholesale diesel prices in the manufacturing and exporting hub of Guangzhou city have gained 26% since September to hit a three-year high of 8,120 yuan ($1,268.00) a tonne last Friday, data from China-based consultancy Longzhong showed. 

Diesel output has been falling each month since June while gasoline has been dropping since July, data from the National Bureau of Statistics showed. By end-September Chinese commercial inventory for gasoline and diesel plunged 24% and 28% year-on-year to 15.91 million tonnes and 17.71 million tonnes, respectively, Longzhong data showed.

Source: Reuters

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