June 18, China National Offshore Oil Corporation (CNOOC, 0883.HK, NYSE:CEO) last Sunday cut the wholesale price of 93-octane gasoline to RMB 7460 per ton, RMB 100 per ton less than the price of rivals PetroChina Co. Ltd. (PetroChina, 601857.SH, 0857.HK) and China Petroleum & Chemical Corp. (Sinopec, 600028.SH, 0386.HK), the National Business Daily reported Friday, citing people at CNOOC subsidiary Marketing Company.
Industry insiders say CNOOC's move signals a complete collapse of the price alliance between the three oil majors and will consequently force Sinopec and PetroChina to follow suit.
CNOOC s heavy price cut has been attributed to its excessive oil storage. According to market analysts, the summer wheat harvest in northern China is the main driver for a push in sales, as CNOOC tries to capture market share from its rivals.
The three oil companies generally set prices together, but the unilateral move by CNOOC will affect its rivals, forcing them to stop cooperating, said Liao Kaishun, an analyst at C1 Energy Ltd., China s leading energy information provider.
At the end of May, CNOOC sold petroleum and diesel at low prices in eastern China. The sale only lasted for a few days, but left a considerable impact on the local wholesale markets.
According to the report, CNOOC in May sold 100,000 tons of petroleum and 400,000 tons of diesel, both up 25% from April. The company plans to raise yearly crude oil processing capacity by 2015 to 51.5 million tons, or 1 million barrels a day. It processed 20.39 million tons of crude oil last year.
Media reports said CNOOC recently has been seeking oil depots in Jiangyin and Wuxi. It plans to rent some oil tanks to store processed oil to give it better access to markets in Jiangyin, Wuxi and Changzhou.
PetroChina and Sinopec raised their crude oil prices earlier this month by RMB 50-100 per ton after international crude prices rebounded on June 8.
According to C1 Energy, stronger market demand only appeared a day before the price hike, after which market demand fell, and even went lower than before after June 11.
Market analysts believe that the failure of the price hike and sluggish demand are the result of low crude oil prices, weak demand in the rainy season and intensified wholesale competition.
Industry insiders say CNOOC's move signals a complete collapse of the price alliance between the three oil majors and will consequently force Sinopec and PetroChina to follow suit.
CNOOC s heavy price cut has been attributed to its excessive oil storage. According to market analysts, the summer wheat harvest in northern China is the main driver for a push in sales, as CNOOC tries to capture market share from its rivals.
The three oil companies generally set prices together, but the unilateral move by CNOOC will affect its rivals, forcing them to stop cooperating, said Liao Kaishun, an analyst at C1 Energy Ltd., China s leading energy information provider.
At the end of May, CNOOC sold petroleum and diesel at low prices in eastern China. The sale only lasted for a few days, but left a considerable impact on the local wholesale markets.
According to the report, CNOOC in May sold 100,000 tons of petroleum and 400,000 tons of diesel, both up 25% from April. The company plans to raise yearly crude oil processing capacity by 2015 to 51.5 million tons, or 1 million barrels a day. It processed 20.39 million tons of crude oil last year.
Media reports said CNOOC recently has been seeking oil depots in Jiangyin and Wuxi. It plans to rent some oil tanks to store processed oil to give it better access to markets in Jiangyin, Wuxi and Changzhou.
PetroChina and Sinopec raised their crude oil prices earlier this month by RMB 50-100 per ton after international crude prices rebounded on June 8.
According to C1 Energy, stronger market demand only appeared a day before the price hike, after which market demand fell, and even went lower than before after June 11.
Market analysts believe that the failure of the price hike and sluggish demand are the result of low crude oil prices, weak demand in the rainy season and intensified wholesale competition.
