Center

Gov't expected to cut cost of oil

By Wang Ying (China Daily)
Updated: 2006-09-26 13:49

Anticipating a possible price retreat, some consumers are momentarily trimming their purchasing plans, according to oil traders.

"Some of our clients are just watching with a wait-and-see attitude over whether domestic oil prices will fall or not," said Wang Jian, a division chief with Xiamen Huahang Petroleum Co Ltd, a major firm based in East China which trades fuel oil and diesel.

For market-based fuel oil, which is used to drive ships and oil-fuelled power plants, prices have dropped 500-600 yuan (US$62.5-75) per ton at Huahang with the global trend, said Wang. The Xiamen-based oil trader currently sells its ship fuel at 5,550 yuan (US$694) per ton, according to figures posted on its website.

"And for government-capped diesel, it is also time to reduce the prices," said Wang, who did not give an estimated margin.

Zhou Dadi, former director of the NDRC's research institute, was quoted as saying the government will likely cut domestic oil product prices if global crude prices remain at about US$60 a barrel or less for one to two months.

Yesterday's crude price drop came after Iran said it's open to talks on the country's nuclear program and BP Plc announced it will restart Alaskan oil wells earlier than expected.

Iran is open to discuss "everything" if the United States stops "threats" of sanctions, President Mahmoud Ahmadinejad said in an interview published on Sunday in the Washington Post.

Meanwhile BP started work over the weekend to resume production of about 150,000 barrels a day from the eastern side of Prudhoe Bay later this week, Bloomberg reported.

Oil may fall for a fifth week this week amid rising US fuel inventories and speculation that losses on natural gas bets at Amaranth Advisors LLC will trigger selling of energy futures by other funds, a Bloomberg survey showed.