China Petroleum and Natural Gas Industry Research Report 2002Q2--Beijing HL Consulting Co., Ltd

In the first half year, the changes of oil price in international market mainly reflect the effects of OPEC¡¯s continuous reducing production and intense situation in Middle East.
Crude oil
Since the beginning of this year, the decreased storage in West due to the reduction of OPEC ¡®s output, increasing demands brought about by recovering economy in USA, labor disturbances of petroleum in Venezuelan as well as worries about petroleum supplies caused by the confrontation between American and Iran and the strife between Israel and Palestine, lead to the price up during continuing four months. After this the oil price decrease slightly, that Iraq stops his export for a month can¡¯t even prevent the price down.
April is the month of the highest oil price since ¡°9.11¡± affair. The oil price was up to the high point of about 28 dollars at the beginning of April and Saudi Arabia¡®s commitment makes the over-heated oil price cool that guarantees the supplies. At the beginning of May, releasing signs of the strife between Israel and Palestine, enlarging output in Venezuela and increasing storage of crude oil in USA make the oil price take on a descendant trend. The oil price is down from about 26 dollars per barrel at the beginning of the month to 24 dollars at the end of the month. In June the oil price fluctuates among the narrow amplitude of 23.50-25.50 dollars per barrel. Accountants¡¯ playing tricks scandal in U.S.A. World Telecommunication Corporation dealing with 3,800,000,000 dollars is exposed and causes the global stock market to slump and brings the hiccup to the oil price, too. On June 27, OPEC decides to sustain present output quotas constant in the third quarter in order to support the oil price. In the second quarter Benchmark oil price rises from 21.50 dollars in the first quarter to 25.41 dollars. However, average Benchmark oil price in the first half year is still less than one year ago, down from 26.67 dollars per barrels in the first half year in 2001 to 23.45 dollars.
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Table 5 Monthly average FOB of spot crude oil in international market since one year

Month/quarter/year	Benchmark	WTI	Dubai	Oman	Minas	Daqing	TAPIS BLEND	OPEC*
Average in 1999	18.02	19.20	17.21	17.05	17.00	17.49	17.07	18.74
Average in 2000	28.53	30.24	26.15	26.77	26.31	28.53	28.46	29.46
Average in 2001	24.89	25.92	22.86	22.89	22.75	24.07	24.00	25.33
Second quarter/01	27.62	27.95	25.13	26.49	25.01	28.02	27.89	28.36
Third quarter /01	25.72	26.67	24.16	24.64	24.10	24.78	24.99	25.64
Fourth quarter /01	19.92	20.37	18.45	16.82	18.55	18.40	18.32	20.40
First quarter/02	21.50	21.62	20.10	18.25	20.41	20.23	20.04	21.27
Second quarter/02	25.41	26.24	24.27	23.24	24.59	25.35	25.37	25.61
Jun. in 2001	27.80	27.59	25.88	28.82	25.42	27.91	27.81	28.16
Jul. in 2001	25.85	28.40	22.51	24.25	22.74	25.01	24.88	27.91
Aug. in 2001	25.76	27.30	24.55	24.60	24.36	24.85	25.28	25.27
Sep. in 2001	26.15	25.93	24.45	25.06	24.35	24.41	24.42	25.86
Oct. in 2001	21.46	22.21	19.93	20.64	19.94	19.17	18.96	21.59
Nov. in 2001	19.19	19.58	17.60	15.09	17.69	18.25	18.14	20.08
Dec. in 2001	19.10	19.34	17.79	14.72	18.02	17.78	17.86	19.53
Jan. in 2002	19.92	19.69	18.40	15.63	18.60	18.86	18.62	20.11
Feb. in 2002	20.32	20.73	19.13	17.72	19.44	18.90	18.81	20.16
Mar. in 2002	24.19	24.38	22.69	21.41	23.19	22.92	22.70	23.55
Apr. in 2002	25.92	26.24	24.27	23.00	24.91	25.82	25.79	25.90
May in 2002	25.68	26.95	24.68	24.00	24.72	25.60	25.55	25.97
Jun. in 2002	24.62	25.53	23.86	22.71	24.15	24.62	24.77	24.97
Average during Jan.-Jun.	23.45	23.93	22.19	20.74	22.50	22.79	22.70	23.44
Same period in 2001	26.97	28.38	24.41	25.05	24.17	26.54	26.36	27.64
Jan.-Jun. at the same period	-3.51	-4.45	-2.23	-4.30	-1.67	-3.76	-3.65	-4.19
Fluctuate	-13.0	-15.7	-9.1	-17.2	-6.9	-14.2	-13.9	-15.2

WTI is a kind of middle oil in WTI in USA. OPEC¡¯s package price of 7 kinds of crude oil, including light crude oil in Saudi Arabia, Sahara oil in Algeria, Bonny light oil in Nigeria, Minas oil in Indonesia, Yismosoil in Mexico(non-OPEC), Deyazuyanain Venezuela.

Figure 6 Weekly average price of main crude oil in international market
Oil products

In the first half year the trend of the world oil products market is similar to that of crude oil but fluctuating amplify is slower than crude oil obviously. In April the global gasoline price increase to the highest point since ten months, whose background is that gasoline storage in USA decrease during continuous two months and Venezuela, one of main supply sources breaks off the export. In April under the driving of American market, average gasoline price in Rotterdam and Singapore is up to 252 dollars per ton (about 30.17 dollars/barrel) and 30.11 dollars per barrel respectively, New York market up to 82.44 cent per gallon (about 34.63 dollars per barrel). The refineries improve the yield and increase export of excessive gasoline in Europe to USA make the price decrease by months.
The diesel oil price is also decrease. In June the average diesel price in Rotterdam, New York and Singapore market is 27.79 dollars per barrel, 27.82 dollars and 27.53 dollars respectively. Naphtha price went up greatly in March and April. Strong rising in petrochemical products¡¯ price and higher operating rate of the equipments for producing ethylene impetus the increasing demand of Naphtha. But in the last months in the second quarter, the price of petrochemical products¡¯ price falls and low operating rate of ethylene producing instruments make the Naphtha price down. However, in the second quarter the Naphtha price in Singapore goes up from 21.62 dollars per barrel in the first quarter to 24.94 dollars.
Table 6 Monthly average FOB of spot oil products in Singapore market
Unit: dollars per barrel, dollars per dun

Month/Quarter/year	Naphtha	Gasoline	Aviation kerosene	Diesel	0.3S	180C*	380C*
Average in 1999	19.55	22.45	22.83	20.44	16.31	107.08	103.41
Average in 2000	28.30	32.48	34.27	32.42	25.45	158.25	152.48
Average in 2001	23.79	27.53	28.33	27.39	21.84	134.14	128.70
Second quarter/01	25.90	27.97	30.11	29.78	25.19	141.03	135.64
Third quarter /01	23.30	26.95	29.84	28.82	22.78	141.94	136.88
Fourth quarter /01	18.40	21.84	23.40	22.90	16.65	115.46	112.15
First quarter /02	21.62	24.36	23.54	23.29	18.32	119.31	117.71
Second quarter /02	24.94	29.46	27.19	28.38	23.29	151.39	147.30
Jun. in 2001	26.63	26.87	30.86	30.00	25.34	139.48	133.39
Jul. in 2001	24.38	29.60	31.89	29.17	22.45	135.39	128.92
Aug. in 2001	22.92	26.96	29.52	28.70	21.49	143.29	138.45
Sep. in 2001	23.94	29.50	31.19	29.32	22.54	150.54	144.29
Oct. in 2001	19.89	22.17	25.76	25.74	18.28	127.78	123.97
Nov. in 2001	17.35	20.93	22.44	22.22	15.82	107.28	103.58
Dec. in 2001	17.94	22.43	22.01	20.75	15.86	111.31	108.91
Jan. in 2002	18.97	20.99	22.93	21.64	16.63	106.39	107.50
Feb. in 2002	20.98	24.16	22.54	22.53	17.49	117.73	115.04
Mar. in 2002	24.92	27.93	25.16	25.69	20.85	133.83	130.60
Apr. in 2002	26.11	30.11	27.27	28.60	22.45	148.31	144.11
May in 2002	24.88	29.73	27.81	28.71	23.46	156.21	152.20
Jun. in 2002	23.83	28.54	26.49	27.82	23.95	149.64	145.58
Average during Jan.-Jun.	23.28	26.91	25.37	25.83	20.80	135.35	132.51
Same period in 2001	26.73	30.65	30.04	28.92	23.97	139.58	132.88
Jan.-Jun. at the same period	-3.45	-3.74	-4.67	-3.09	-3.17	-4.23	-0.38
Fluctuate	-12.9	-12.2	-15.5	-10.7	-13.2	-3.0	-0.3

* Note: Octane value of gasoline is 95 without Pb; the sulfur amount of diesel oil is less than 0.5%; 0.3S is a kind of fuel oil with low sulfur; 180 centisthene and 380 centisthene is 180 centistoke and 380 centistoke high-sulfur fuel oil respectively.

Benchmark

Minas

TAPIS BLEND