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China’s NDRC sees crude oil prices trading average $80 in 2010
Published on January 28, 2010 by oilprices · No CommentsChina’s state economic planning agency (NDRC) sees global crude oil prices trading average of around $80 a barrel for 2010, up from 2009, the official Xinhua news agency said, a level deemed conducive to both refiners and oil producers. Xinhua cited the forecast made by the National Economy Department of the National Development & Reform Commission.
China in early 2009 started linking domestic gasoline and diesel prices with costs of a basket of global crude and provided a fixed margin for refiners when crude averaged under $80 a barrel. That guaranteed margin, which was never made known, dwindles when crude prices rise above $80 and disappears when crude shoots above $130.
China’s refining giant Sinopec Corp suffered huge losses in 2008 when crude oil prices were trading as high as $147 a barrel in July 2008. A subsequent plunge on oil prices to under $40 in late 2008 hurt crude producers such as PetroChina, forcing the top Asian oil producer to scale back output. “Extreme oil price environments and related policies add business risks to oil firms,” the Xinhua report said.