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China is set to reduce gasoline and diesel retail prices from Wednesday, the third cut in just over two months, state television quoted an official of the National Development and Reform Commission (NDRC) as saying on Monday.
"July 11 is the point for a new round of price adjustment... and oil prices have fallen more than 4 percent," Zhou Wangjun, vice director of the pricing department of NDRC told the state television.
"According to the current pricing scheme, we will cut domestic fuel prices on July 11," Zhou said, without giving a range of the reduction.
Industry sources have forecast the cut at 400 to 600 yuan ($62.9-$94.3) per tonne, o r between 4 to 7 percent, adding to the combined 8-9 percent cut in May and June.
(China's retail fuel price history: )
The NDRC has said it considers changing fuel prices if the 22-day moving average of international crude oil prices rises or falls by 4 percent. It also takes in account other factors such as inflation, fuel supply and demand.
The 22-day moving average price of Brent, Dubai and Cinta on July 6 was 9.5 percent lower than the level on June 7, far exceeding the 4 percent trigger point, data from C1 Energy showed. (www.icis-china.com)
China has been considering changes to the current fuel pricing scheme to better reflect refining costs, with plans to lower the trigger point, shorten the review period and change the composition of the basket of crudes to which pump prices are linked.
NDRC's Zhou did not give a clear idea if the current oil prices warrant an immediate change of mechanism.
"If the oil prices are high, we dare not launch the new pricing scheme; If (crude) oil prices are too low, lower than the domestic lifting cost, then the condition is not ripe either," Zhou was quoted as saying.
A midpoint where international oil prices are at a reasonable level and can satisfy the cost of domestic fuel production is a good time to launch the new scheme, he added.
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