A staff member refuels a car at a filling station in Hai'an, east China's Jiangsu Provicne. Photo: Xinhua

As oil prices fell below $40 per barrel, analysts said China would not adjust retail prices for refined oil products.

As of 16:43, Brent crude for August delivery dipped by $0.60, or 1.55 percent, to $38.01 per barrel on the London ICE Futures Exchange. 

Meanwhile, West Texas International (WTI) for July delivery shrunk $0.96, or 1.93 percent, to $35.56 per barrel on the New York Mercantile Exchange.

Market participants are concerned about a second wave of COVID-19 cases, which would restrict economic recovery and oil demand. Therefore, oil prices are unlikely to rebound swiftly, said Yang Xia, an oil analyst at market information provider Sublime China Information Co. 

Oil prices also dragged as US commercial crude oil inventories increased by 5.7 million barrels during the week ending June 5. At 538.1 million barrels, US crude oil inventories are about 14% above the five-year average for this time of year, the US Energy Information Administration said Wednesday.

According to China's current pricing mechanism, refined oil product prices are adjusted every 10 working days when international crude oil prices see changes of no less than 50 ($7.04) yuan per ton. China will not adjust retail prices for refined oil products when international crude oil prices go below $40 per barrel, the floor rate, or above $130 per barrel, the ceiling.

China slashed prices of gasoline and diesel to a level corresponding to $40 per barrel on March 17 amid the global oil price collapse.

Global Times