China likely to lower oil prices

China is likely to slash gasoline and diesel prices in the coming week due to sluggish domestic demands and a continuing crude price slump in the global market.

Ma Yan, analyst with crude research website Chem365.net, predicted the authorities will cut guide prices for oil products, the last price lowering in the year after the retail prices have fell by 10 consecutive weeks in a row.

The prices will decline by around 440 yuan (71 U.S. dollars) per tonne, Ma said.

A research note at commodity e-commerce platform 365.com made similar predictions, estimating the price drop will be around 470 to 490 yuan per tonne for both gasoline and diesel.

Oil price changes are usually announced by the National Development and Reform Commission, China's top economic regulator, and the expected drop may be unveiled on Dec. 27 according to China's oil pricing mechanism.

Analysts attributed the probable price adjustment to shrinking domestic demands in winter and a weak global market.

The research note showed the demands were dampened in China as the number of construction projects decreased, chilled by severe cold in the country's northern areas, and shrinking needs from individual consumers.

International crude prices maintained a losing streak due to lingering market concern over oversupply and disappointing manufacturing data from the European Union and China the previous month.

Brent crude slipped to less than 60 U.S. dollars for the first time in five and a half years in last week, while light, sweet crude stayed around 56 U.S. dollars a barrel on the New York Mercantile Exchange.

Sang Xiao, another Chem365.net analyst, said the global market will start to fluctuate given such a low price level.

The research note of 365.com predicted the crude price decline will narrow in the week but the downward pressure will remain.