The Beijing branch of China National Petroleum Corporation (CNPC) Friday lowered petrol prices at about 100 gas stations in Beijing.
The country will consider its domestic oil supplies and consumer purchasing power when setting refined oil prices under a new system designed to link them with global crude markets.
China will raise domestic natural gas prices gradually to bring them in line with the international market.
A public hearing to consider a rise of almost 8 per cent in domestic natural gas prices ended on Friday, with few objections heard.
With international oil prices the subject of intense scrutiny and debate, the price mechanism for oil in China has also been targeted. Many people, noting that the domestic price of oil went up with the price of international crude oil, are wondering when the price of refined oil will be lowered now that the international price has fallen.
The drop in the oil price is good news for China's oil imports. In the first nine months, China's imports of crude oil rose 16.3% to 109 million tons.
A mechanism should be set up to connect domestic oil prices with the international market.
China may not reduce its domestic price for refined oil products in the short term even though international crude oil prices have dived 20 percent in the last three months, according to experts with the state macro-economic control institution.
Niu Li, an economist with the State Information Center, said if the international crude oil price continues to fall and remains at a lower level, the Chinese government should accelerate its pricing reform on processed oil.
Due to soaring oil prices, the largest mainland carrier Air China posted a 22.5 per cent drop in net profits to 458 million yuan in the first half, compared with 591 million yuan a year ago.
Friday marks the two-year anniversary of fuel oil trade on the Shanghai Futures Exchange (SFE) and the increasingly brisk trade has led to the development of a price-fixing system based on supply and demand in China's fuel oil market.
The price of refined oil has been raised many times in China. It is of vital importance that the country's oil price is pegged to that on the world market and is subjected to market forces.
