BEIJING : China on Sunday said it was releasing gasoline and diesel reserves to boost market supply and stabilise prices in some regions, a public statement of such rarity that analysts said it was enough to push oil prices lower on Monday.
Brent crude and U.S. West Texas Instrument crude both dropped – 0.2per cent and 0.4per cent respectively – having risen on Friday after China’s National Food and Strategic Reserves Administration disclosed the release in what some market watchers said was the first such statement in memory.
The move is one of a number of attempts being made by Beijing to cool a stellar rally in commodity prices that has squeezed manufacturers’ margins. Earlier in the year China released other commodities from reserves, including a rare release of crude oil and base metals, to cool prices. “(Oil) product rotation should be more common than crude (oil releases from reserves),” said, Sengyick Tee, analyst at Beijing-based consultancy SIA Energy said, but such moves are not typically confirmed in official statements.
He said Sunday’s move could be the first time Beijing has publicly announced a release of oil products.
“Words are bigger than actions, (China) learned it from OPEC+,” he said, referring to communications on supply from the alliance of the world’s major oil producers that can have the effect of lowering market prices. In its statement on Sunday, the Strategic Reserves Administration said, “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.”
Sinopec Corp, Asia’s largest oil refiner, plans to fully utilise domestic refining capacity in November and boost diesel supply by 29per cent from a year earlier to ensure filling stations do not run out of stock, a spokesman said earlier last week.
(Reporting by Shivani Singh and Muyu Xu in Beijing, Florence Tan in Singapore and Beijing newsroom; Editing by Kenneth Maxwell)
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