China's economy "runs out of steam", oil prices plummet; domestic gasoline prices may increase by 600-900 VND/liter

Today's oil prices, June 1st, increased US oil reserves, stronger USD, weak recovery of China's economy pushed oil prices to "plummet".

Giá xăng dầu hôm nay 1/6: Kinh tế Trung Quốc 'hụt hơi', giá dầu lao dốc; giá xăng trong nước có thể tăng 600-900 đồng/lít

Gasoline prices today, June 1, domestic gasoline prices may increase by 600-900 VND/liter. (Source: Bizlive)

Oil prices extended losses into the trading session on May 31, pressured by a stronger US dollar and weak data from top oil importer China that raised concerns about demand, Reuters reported.

Brent crude for August delivery fell $1.11 to $72.60 a barrel. U.S. West Texas Intermediate (WTI) crude fell $1.37, or 2 percent, to $68.09 a barrel.

Both benchmarks fell more than $2 at one point during the session to multi-week lows, after Brent and WTI both fell nearly 5% in the previous session.

Oil prices fell after Chinese data showed manufacturing activity contracted faster than expected in May due to weak demand. The official manufacturing purchasing managers' index (PMI) fell to a record low of 48.8 from 49.2 in April, missing forecasts for a rise to 49.4. Slowing service sector activity pushed the official non-manufacturing PMI down to 54.5 from 56.4. The weak PMI is evidence that the East Asian nation's economic recovery is losing momentum.

Analysts are now lowering their expectations for the Chinese economy, with both Nomura and Barclays cutting their forecasts for China's 2023 GDP growth.

Meanwhile, the US dollar strengthened, supported by cooling inflation in Europe and progress on a bill to raise the US debt ceiling.

Reuters also reported that US data showed that job openings unexpectedly increased in April. Specifically, job openings, a measure of labor demand, increased by 358,000 to 10.1 million on the last day of April, indicating persistent strength in the labor market. This could prompt the US Federal Reserve (Fed) to raise interest rates in June. The Fed's Beige Book report on May 31 described the labor market as "continued to be strong" in May.

Weaker-than-expected Chinese economic data, the debt ceiling hike, two years of flat spending and the possibility of another Fed rate hike next month are weighing on the market, said Bob Yawger, director of energy futures at Mizuho.

Traders will be watching the upcoming OPEC+ meeting on June 4. Mixed signals from major oil producers on further production cuts have caused volatility in oil prices, but HSBC and Goldman Sachs banks and analysts do not expect OPEC+ to announce further cuts at the meeting.

Stronger oil demand from China and the West from the summer onwards will cause a supply deficit in the second half of the year, HSBC said.

“The most likely course of action is no action,” said Stephen Brennock, oil market analyst at PVM, of the OPEC+ decision.

In the US, crude oil production at the field increased in March to 12.696 million barrels/day, the highest since March 2020.

Data from the American Petroleum Institute (API) showed that US crude oil inventories rose by 5.202 million barrels last week, compared with analysts' expectations for a decrease of 1.22 million barrels. US gasoline inventories also rose by 1.891 million barrels.

Rising US oil and gas reserves have pushed oil prices down further.

During the adjustment of retail gasoline prices on May 22, gasoline prices increased across the board. After the adjustment by the Ministry of Industry and Trade and the Ministry of Finance, the price of RON 95-III gasoline increased to VND21,490 (up VND490), and E5 RON 92 gasoline was VND20,480 (up VND350) per liter.

Prices of some oil products increased and some decreased. Specifically, diesel oil is 17,950 VND per liter, an increase of 300 VND. Kerosene has a new price of 17,960 VND, a decrease of 10 VND, and fuel oil has increased by 290 VND, with a new price of 15,150 VND/kg.

In this adjustment period, the regulatory agency has decided to set aside a price stabilization fund of 300 VND for all types of gasoline.

The average price of finished gasoline in the Singapore market has tended to increase compared to the previous period, according to data from the Ministry of Industry and Trade updated to May 29. Specifically, the average price of RON 92 gasoline used to make E5 RON 92 gasoline is 88.13 USD/barrel, RON 95 is 93.07 USD/barrel. Similarly, the price of other types of oil tends to increase.

The leader of a petroleum company said that based on world price developments, in the June 1 adjustment period, the domestic price of E5 RON 92 gasoline could increase by 600-800 VND/liter, and RON 95 gasoline could increase by 700-900 VND/liter. If the Ministry of Industry and Trade and the Ministry of Finance use the price stabilization fund, gasoline prices could increase slightly.

If the forecast is correct, domestic gasoline prices will increase for the second consecutive time. Since the beginning of the year, fuel prices have undergone 15 adjustments, including 8 increases, 6 decreases and 1 unchanged.

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