Price reduction! Gasoline and diesel prices will see the largest reduction this year

Recently, the market is pessimistic about the implementation prospects of the OPEC production cut agreement. In addition, the increase in production by oil-producing countries has revived concerns about oversupply. Since late October, international oil prices have fallen rapidly from the highs of the year, and the previous wave of gains driven by the production cut agreement has disappeared. In this pricing cycle, the change rate of the basket of crude oil started with a large negative value, and then the negative range expanded. It is expected that at 24:00 on November 16, domestic gasoline and diesel prices will usher in the largest reduction this year, with a reduction of more than 0.25 yuan per liter.

Affected by the negative impact on the supply side, "weakness" is the main tone of the crude oil market recently. As of November 11, WTI and Brent crude oil futures closed at US$43.41 and US$44.75 per barrel, respectively, a cumulative decline of more than 15% from the year's highs set in October.

On November 9, the results of the US election were announced. The market expects that the next US government may ease restrictions on oil exploration and energy infrastructure projects. US shale oil, which has just shown signs of production reduction this year, may make a comeback in the near future.

The prospect of "great development of the US oil industry" in the future has cast a shadow on the already contradictory OPEC agreement on production cuts. In fact, after reaching a framework production cut agreement in Algeria at the end of September, there has been no substantial follow-up from the oil-producing countries. In October, major oil-producing countries competed to increase production, and supply pressure was significantly released.

The International Energy Information Agency (IEA) monthly report shows that with the return of production in Nigeria and Libya and the record high in Iraq, OPEC production increased to a record high of 33.83 million barrels per day in October, which is nearly 1.3 million barrels per day higher than a year ago. According to the latest data from the Russian Ministry of Energy, Russia's crude oil and condensate production climbed to 11.2 million barrels per day in October, breaking the record high set in September. To make matters worse, the IEA predicts that due to the increase in production from non-OPEC oil producers such as Russia, Brazil, Canada and Kazakhstan, non-OPEC supply will return to growth in 2017 after a reduction of 900,000 barrels per day this year.

According to data released by the Xinhua News Agency's oil price system, during this pricing cycle, the average price change rate of a basket of crude oils opened at a large negative value of -9.62%, and then the negative range deepened. As of November 11, the change rate of the basket of crude oils was -11.22%. According to the current change rate level, when the new round of refined oil price adjustment window opens at 24:00 on November 16, domestic gasoline and diesel prices will usher in the largest reduction this year, and the reduction is expected to reach 330-360 yuan per ton. This is equivalent to a reduction of 0.26-0.28 yuan per liter for 93# gasoline and 0.28-0.31 yuan per liter for 0# diesel.

Li Yan, a crude oil analyst at Longzhong Information, said that given the large reduction in this price cut, some domestic gasoline retail prices will fall back to the 5 yuan era, which is good news for private car owners. For example, for an ordinary car with a 60L fuel tank, a full tank of gas will save more than 15 yuan compared to before. Before the next round of price adjustment window opens at 24:00 on November 30, car owners will be able to enjoy low oil prices for a period of time.

On October 19, the retail prices of gasoline and diesel experienced the largest increase this year, with gasoline increasing by 355 yuan per ton and diesel increasing by 340 yuan per ton. It is expected that this reduction will basically offset this increase. So far this year, the retail prices of gasoline and diesel have experienced 7 increases and 4 decreases, with gasoline increasing by 670 yuan per ton and diesel increasing by 645 yuan per ton.

In the domestic market, Liu Xia, an analyst at Treasure Island Information, believes that this round of retail price cuts is a foregone conclusion, and the news is negative. On the supply side, as some regions have replaced negative resources, the oil product upgrade process is also proceeding in an orderly manner, and the tight resource situation across the country has eased. On the demand side, as the weather turns cold, the travel radius of private cars narrows, and gasoline enters the off-season; boosted by the rush to work for outdoor operations such as mining and infrastructure before the New Year, diesel terminal demand may still have some support. Overall, due to the excessive rise in the previous market, gasoline and diesel prices began to fall from high levels, and the preferential strength of the main wholesale links continued to expand. At present, multiple negative factors are emerging, and it is expected that domestic refined oil prices will continue to fall in the short term, and the market outlook in the later period is not optimistic.

In terms of crude oil, Huatai Futures analysts believe that the recent supply pressure in the oil market has been released in a concentrated manner, and the market has great doubts about whether OPEC can reach a production cut. Nigeria and Libya, which are on the preliminary exemption list, have seen a significant increase in supply recently. If favorable policies are introduced in the future, US crude oil production is likely to rebound. In addition, the strengthening of the Fed's interest rate hike expectations is also bearish for oil prices. However, the subsequent recovery in demand may help digest the excess supply, and it is expected that crude oil may still receive some support below $45 per barrel.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.