Refined oil prices in China have stabilized after the country's major refineries increased production capacity. The unit price for diesel in Sichuan Province and Chongqing Municipality even dropped 10 percent from a week ago.

The average operating rate nationwide has exceeded 83 percent, up two percentage points from two weeks ago, according to Oilboss.cn, a Web portal for China's refined oil distributors and retailers.

The daily production capacities of plants in south China have reached 90 percent or more. Both PetroChina and Sinopec, the nation's two largest oil producers, have ordered plants to raise daily production to meet the demand.

"The operating rate will be further lifted in the near future," said Li Yu, editor-in-chief of Oilboss.cn.

An eight million ton/year crude oil distillation unit in Shanghai has returned to daily operation, easing supply concerns in east China. Meanwhile, the Guangzhou subsidiary of Sinopec planned to refine an extra 70,000 tons of crude oil this month and the Yanshan subsidiary in Hebei Province will increase its monthly output by adding at least 50,000 tons.

PetroChina also imported 100,000 tons of diesels to relieve the shortage in south China, where trucks queued in lines at gas stations.

Demand for crude oil in China has exceeded output as some refineries cut production because of soaring costs and government-capped fuel prices. The nation's crude oil imports also fell to the lowest in eight months in October as prices climbed to records.

Premier Wen Jiabao last week said he would ask refiners to expand capacity to turn crude oil into fuels for cars and factories. Some of the nation's refineries aren't running at maximum operating rates, Wen said last Wednesday in Singapore, where he attended the East Asia Summit.

The Ministry of Commerce called on PetroChina and Sinopec on Saturday to go all out to ensure a stable supply of fuel.

The fuel shortages have been eased to some extent after the government raised prices early this month, but many regions still face tight supply, according to a ministry notice.

The prices of gasoline, diesel and aviation kerosene were increased 500 yuan (US$67.60) per ton, almost a 10-percent rise, on November 1.

(Shanghai Daily November 26, 2007)