I. International Crude Oil Continues to Rise, Finished Oil to See Eighth Increase This Year

It is predicted that at 24:00 on October 10, 2024 (which is midnight this Friday), the pricing window for finished oil will open again. According to the domestic finished oil pricing mechanism, the increase in domestic finished oil on October 11 will be approximately 115 yuan/ton, marking the eighth rise in 2024. If this price increase occurs, private car owners filling up a 70-liter tank will spend an additional 6 yuan.

During this pricing cycle, international crude oil prices first fell and then rose. As of October 8, the average reference crude oil price for the cycle was $73.42 per barrel, up 2.43% from the previous cycle, making the increase in this pricing cycle almost certain.

On the supply side, the OPEC+ reduction of 2.2 million barrels/day will remain valid until the end of November, and several oil-producing countries, including Iraq, have indicated that they will carry out compensatory production cuts. In addition, the tension between Iran and Israel has not been resolved, and potential supply risks continue, maintaining a tight supply situation.

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On the demand side, after the traditional peak season in the United States, commercial crude oil inventories have shown a rebound, and market concerns about the global economy and demand prospects have not dissipated, continuing the pressure on the demand side. The Federal Reserve's interest rate cut in November has been reduced to 25 basis points, and the benefits provided by subsequent relatively moderate interest rate cuts may be limited.

So far this year, domestic oil prices have undergone nineteen adjustments, with "seven increases, eight decreases, and four standstills". After offsetting the increases and decreases, domestic gasoline and diesel prices per ton have fallen by 215 yuan and 205 yuan, respectively, compared to the end of last year. According to Longzhong Information's calculations, after this pricing adjustment, the 2024 finished oil pricing will present a "four standstills, eight increases, and eight decreases" pattern.

II. Gasoline and Diesel Prices Both Fall During the Cycle, with Gasoline Decline Exceeding Diesel

In terms of wholesale, as of October 8, the domestic market average price for 92# gasoline was 7,816 yuan/ton, down 2.63% from the previous pricing cycle, and the market average price for 0# diesel was 6,836 yuan/ton, down 0.74% from the previous pricing cycle. Both gasoline and diesel prices fell, with the gasoline decline continuing to exceed that of diesel. Analyzing the situation, during this cycle, Brent futures prices first fell and then rose, eventually closing higher. However, the market sentiment was mostly bearish, with consumption not meeting expectations, leading to both gasoline and diesel cracking spreads reaching new lows for the year, and gasoline and diesel prices were weaker than crude oil, ultimately closing lower. Taking Shandong's refining as an example, the gasoline sales rate during the cycle was 87%, down 1 percentage point from the previous cycle. Under the bearish sentiment of downstream players, they continued to purchase on demand. There was no concentrated stockpiling before the festival, and gasoline consumption increased significantly during the National Day holiday, coupled with the rebound of crude oil and restocking after the festival, which boosted prices. The diesel sales rate was 94%, up 1 percentage point from the previous cycle. There was some recovery in demand, but it did not reach the level of the same period, and the sales of both gasoline and diesel did not balance, with prices continuing to fall.III. Wholesale Price Decline Not as Significant as the Previous Round of Retail Price Reductions; Retail Profits Fall from High Levels

From a retail perspective, currently in Shandong, the prices of 92# and 95# gasoline at Sinopec gas stations are 7.34 and 7.87 yuan per liter, respectively. It is anticipated that retail prices will rise in this round, and private car owners can refuel in advance. Looking at the retail profit levels, during this period, the theoretical retail profit for domestic gasoline is 1830 yuan/ton, a decrease of 1.19% compared to the last pricing cycle, and the theoretical retail profit for diesel is 1173 yuan/ton, a decrease of 10.46% compared to the last pricing cycle. Although wholesale prices fell during the cycle, the reduction in domestic retail prices in the previous round was larger than the decline on the wholesale side, leading to a fall in retail profits from high levels.

IV. Production Cuts and Geopolitical Factors Support a Higher Probability of Price Increases in the Next Round of Adjustments

Looking ahead, the continuation of OPEC+ production cuts, with multiple oil-producing countries expressing support for the cuts, combined with unstable situations in the Middle East, suggests that supply tightness and continued benefits will persist. However, demand-side pressures may limit the upward movement of oil prices. It is worth noting that the accumulated increase in international oil prices during the National Day holiday will provide significant support for the next round of adjustments, and the opening of the next round is expected to achieve a higher increase. It is anticipated that the probability of an increase in the next round of refined oil price adjustments is high, and the next round of refined oil retail price adjustment window will open at 24:00 on October 23, 2024.