01, Price Increase

Starting from the early hours of today, the domestic gasoline and diesel prices have risen in tandem, with an increase of 200 to 210 yuan per ton.

For our daily refueling, the price of 92-octane gasoline has increased by 0.16 yuan per liter, and filling up a 50-liter tank will now cost an additional 8 yuan.

Entering 2023, this is the third price adjustment, with two increases and one decrease so far, and the overall trend is still upward. Currently, the price of 92-octane gasoline in most parts of the country is about 7.5 yuan per liter, but this price is significantly lower than last year.

02, Current Changes

In the past 10 working days of the observation window, the time span actually exceeded three weeks due to the Spring Festival holiday, so the changes in international crude oil prices were quite significant. There was an initial increase, but a noticeable decline has occurred in the last few days.

The chart above shows the performance of WTI international crude oil prices since the beginning of 2023, with an initial surge, and then from late January, the price dropped from a high of over 83 dollars per barrel to the current 73 dollars.

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However, due to the early rise, the reference oil price change rate in this observation window is close to 5%, leading to the second increase this year.

03, Future Influencing Factors

But we cannot judge that the next price adjustment window will see a drop in oil prices, for several reasons.Firstly, factors stemming from the US dollar.

Although the Federal Reserve has just decided to raise interest rates by 25 basis points, the US dollar index did not strengthen as a result, and it may even continue to decline in the future, potentially breaking below the 100 mark in the near term.

As the US dollar falls, commodity prices are likely to rise, and the price of crude oil has also received corresponding support.

Secondly, factors from the new price cap.

Starting in February, under the continuous push of the United States, Western countries will impose a price cap on Russian exported refined oil products, which is an escalation following the crude oil price cap in December.

This has become a new uncertain factor, potentially leading to a reduction in the supply of refined oil products or causing price confusion in the market.

Although domestic refined oil product price adjustments are mainly linked to international crude oil prices, the impact of the new price cap on domestic supply cannot be ruled out.

04, US East Coast

However, even if domestic oil prices will rise, the situation might be worse on the US East Coast.

This is because the United States' crude oil and gasoline reserves are primarily located in the Gulf of Mexico, which is a certain distance from the East Coast, and a significant portion of the East Coast's gasoline supply comes from Europe.Once a new price cap on Russia's refined oil exports is implemented, it may lead to a continuous increase in gasoline prices on the East Coast of the United States.

In fact, during May and June of last year, the average price of gasoline in the United States once rose above $5 per gallon, forcing many American families to reduce their driving, leading to widespread complaints and putting significant pressure on President Joe Biden.

Fortunately, after mid-June of last year, international crude oil prices began to fall, and the average gasoline price in the United States also declined.

However, this price cap may create a peculiar phenomenon where crude oil prices do not rise significantly, but gasoline prices keep increasing.

As domestic consumers, we can only hope that these impacts will have as little effect as possible on domestic fuel prices.