OREANDA-NEWS. August 31, 2012. The National Development and Reform Commission (NDRC) may increase retail fuel prices on Sept. 10, raising the possibility of a second consecutive monthly increase, oil industry analyst Lu Jianfeng told.

Lu expected the average price of a basket of crude oil used to calculate domestic fuel prices to be up by more than four percent by the end of Wednesday from Aug. 8, meeting one of the two conditions that would trigger an adjustment of retail gasoline and diesel prices.

The NDRC changes fuel prices after the basket of crude prices moves four percent over 22 consecutive working days. The average price of Brent, Cinta and Dubai crude had climbed 3.88 percent by the end of Tuesday, according to the state-run Xinhua news agency.

If crude prices continue to climb at this pace retail prices are expected to be raised by approximately RMB 400 (USD 62.9) per ton, said Lu.

A rush by traders to purchase diesel and gasoline in anticipation of a price hike has pushed up wholesale prices at China National Petroleum Corp. and China Petroleum and Chemical Corp., the country’s biggest oil refiners by output, to near to the highest retail prices.

“Wholesale prices of diesel in some regions like Beijing, Shanxi and Hubei are basically on par with the highest retail prices, while the gap in other regions has narrowed to RMB 20 (USD 3.15) to RMB 100 (USD 15.74) per ton,” said Lu.

The two oil majors restricted wholesale sales in most cities, especially in north China, and stopped sales to distributors in favor of direct sales ahead of the expected price increase to boost profits, said Lu.

Even as the peak summer fuel consumption period draws to a close wholesale gasoline prices are expected to climb further in the next few weeks as China’s Mid-Autumn Festival and National Day holidays at the end of September and the start of October sustain demand.

Demand for diesel meanwhile will grow in September as the busy fishing and farming seasons start.

The NDRC will likely act immediately to increase prices if the conditions are satisfied to encourage refiners to raise production, Lu added.

Chastened by losses this year caused by high oil prices some Chinese refineries have moved to halt production or brought forward annual maintenance plans to reduce supply in the market.

Operating rates at refineries in Shandong, a major oil base in the north of the country, rose two percent week-on-week to 29 percent the week ended Aug. 17 following the previous fuel price hike, oil analyst Huo Zhihui told.