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CNPC, Sinopec push up oil prices to cut stockpiles - report By Cai Muyuan (chinadaily.com.cn)

Updated: 2010-02-23 18:10

China National Petroleum Corp (CNPC) and China Petroleum & Chemical Corporation (Sinopec), the country's leading oil and gas producers, began to heat up wholesale prices of refined oil following the rebound of crude oil prices in the international marketplace.

Between Feb. 20 and Feb. 22, wholesale prices of diesel and gasoline rose more than 100 yuan ($14.64) per ton, the National Business Daily reported Monday.

Market analysts said price hikes by the two companies will trigger panic buying, which will help reduce stockpiles and sales losses for the two companies.

"The wholesale price of diesel have been rising for days," an employee of Sinopec's sales company told the newspaper by telephone. "The diesel price is 6,450 yuan a ton and gasoline 7,600 yuan a ton."

Private refining companies followed suit and raised prices. Liu Feng, a researcher with an information service company said. China's leading refineries in Shandong province raised their wholesale prices yesterday, with the gasoline price rising about 150 yuan per ton.

According to statistics, CNPC and Sinopec raised factory-gate prices of diesel and gasoline yesterday in many provinces. The wholesale price of gasoline in Hubei province rose by 200 yuan to 7,300 yuan to 7,600 yuan a ton, the biggest rise across the country.

Price increase a stunt?

"Both companies raised prices for selling the stocks," said Liu. "The dealers tend to buy in when the market price is high. It is the two companies' habitual practice for their sales approach."

The world oil price rose 7.7 percent in the latest four trading days and soared to $79.97 a barrel on Friday.

This round of price increases has not exceeded the permissible limit. Liu said the National Development and Reform Commission adjusted the oil price on Nov 10, with the wholesale price of gasoline limited at 8,037 yuan a ton.