National fuel oil prices rise today

CHINA raised fuel oil prices early today as a response to the surging crude oil costs in the global market.

From after midnight last night, the prices of gasoline, diesel and aviation kerosene will be raised by 500 yuan (US$66.67) per ton, the National Development and Reform Commission announced in a statement on its Website late yesterday.

This is the first time China has raised fuel oil prices since the second quarter, though global crude oil prices have been rising since March. Recent crude increases have been sharp.

Crude oil for December delivery rose US$3.07, or 3.4 percent, to US$93.45 a barrel at 11:46am on the New York Mercantile Exchange yesterday. The futures touched US$94, the highest since trading began in 1983. Oil is up 58 percent from a year ago.

Fuel prices are under state control in China which has been battling with inflation pressure as the central bank has raised interest rate five times and bank reserve ratio eight times this year.

The benchmark one-year lending rate stands at a nine-year high of 7.29 percent, while the required reserves that commercial banks must park at the central bank were raised to a decade-high 13 percent.

China's consumer price index, a key inflation indicator, increased 6.2 percent in September after a decade-high 6.5 percent in August. For the first nine months, it grew by 4.1 percent.

According to the NDRC, China's top economic planning body, the national average basis price for gasoline will be raised from 5,480 yuan to 5,980 yuan per ton, and the diesel will be increased from 5,020 yuan to 5,520 yuan per ton.

The average retail price will be further increased by eight percent - to 6,460 yuan a ton for gasoline and 5,960 yuan a ton for diesel. It will translate into an increase of 0.4 yuan and 0.46 yuan for a liter of gasoline and diesel respectively.

The NDRC said the price of liquefied petroleum gas and liquefied natural gas will also be increased.