Gas, diesel prices to drop on Friday

A member of staff works at a gas station on Feb 27, 2015 in Jiangsu province. [Photo/IC]

China's top economic planner, the National Development and Reform Commission, announced on late Thursday afternoon that the authority decided to reduce the retail price of gasoline by 240 yuan ($38.73) a metric ton, or 0.18 yuan per liter, and the diesel price by 230 yuan a metric ton, or 0.2 yuan per liter, starting on Friday.

The reductions follow two rises and two cuts this year, after 11 cuts in a row last year, since global crude prices started to fall last June.

The retail oil price adjustments are calculated based on China's retail oil pricing mechanism, which is linked to world oil price changes, starting in March 2013.

According to the mechanism, the authority will adjust the retail price of oil on April 10.

Xue Qun, an oil analyst with domestic data consultancy firm Shandong Longzhong Information Technology Co, said this round of the retail price cut will save fuel costs of about 7 yuan to 10 yuan for every 500 kilometers driven in a family car.

"The Chinese traditional holiday, Tomb-Sweeping Day in early April will bring a gas consumption increase as a large number of families who will drive to travel during the holiday," she said.

The logistics industry will save 70 yuan in fuel costs for each 1,000 kilometers by a delivery truck.

Increasing infrastructure projects will start construction in April, which will bring a rising demand for diesel. However, there is still no concrete support for global crude prices, Xue said.

According to the China Petroleum Enterprise Association, China's retail oil prices had four rises and 15 cuts in 2014, mainly caused by the fall of global crude prices.

The association said China's demand for refined oil products will grow at a slower rate this year because of the economic slowdown and energy structure adjustment.