During the May 1st holiday, despite high U.S. crude oil inventories, international oil prices saw an upward trend due to strong employment data and continued loose monetary policies from both the U.S. and European Central Banks. As the holiday period ended, the domestic refined oil market experienced a shift in sentiment, with traders adopting a wait-and-see approach and overall market activity becoming lighter.
On the last trading day of the week, New York crude oil futures closed at $95.61 per barrel, up 2.8% from the previous week, while Brent crude reached $104.19 per barrel, marking a 1% increase for the week. These gains were supported by positive U.S. non-farm job numbers, which showed 165,000 new jobs added in April, with the unemployment rate dropping to 7.5%, below expectations. The Federal Reserve also reaffirmed its commitment to maintaining ultra-low interest rates and continuing its $85 billion monthly quantitative easing program.
Meanwhile, the European Central Bank cut its key interest rate by 25 basis points to a record low of 0.5%, signaling a shift in policy to support economic recovery amid weak growth and declining inflation. This move, combined with the Fed’s ongoing stimulus, has helped bolster global oil markets.
In addition, U.S. housing prices rose sharply in February, hitting their highest year-on-year increase since the 2006 real estate bubble burst, indicating a continued recovery in the property market. Consumer confidence also rebounded in April after a dip in March, suggesting improved economic sentiment.
However, rising U.S. crude oil inventories, which hit a record 3.953 billion barrels as of the week ending May 26, have created concerns about weakening demand. This has put downward pressure on oil prices despite broader supportive factors.
Analysts like Ma Yan from Zhongyu Information note that recent volatility in international oil prices remains uncertain, with short-term downside risks still present due to U.S. debt concerns. Domestically, while the holiday period initially boosted terminal consumption, the post-holiday slowdown led to weaker trading activity, with downstream users placing smaller orders and traders holding more cash.
According to Zhongyu Information, as of May 3, the average price of gasoline from China National Petroleum was 93.63 yuan per ton, while diesel averaged 7,793 yuan per ton. These prices were significantly higher than retail sales prices, with a gap of 449 and 339 yuan per ton respectively for gasoline and diesel.
Ma Yan pointed out that even though international oil prices have rebounded, it hasn’t improved the soft domestic gasoline and diesel market. With the new pricing mechanism in place, businesses are buying only on demand, and speculative activity has declined. Most regions remain stable, with Beijing being the exception, where slight price increases have been observed.
Regionally, South China, Yantai, and Southwest markets remained stable, but gasoline and diesel trading remained sluggish. In East China, competition was fierce, with companies vying for low-cost supplies and driving market activity. Refinery operations in the northwest and northeast remained steady, while Shandong refineries faced declining sales and weak demand.
Treasure Island analysts predict that the domestic refined oil market will continue to face challenges, with limited price improvements expected in the short term. With the next price adjustment scheduled for May 10, the outcome will depend heavily on future trends in international crude oil prices, and a small adjustment is anticipated, leading to a cautious market outlook.
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