Crude prices shed nearly $4 after China says it will raise gas and diesel prices 8%, prompting concerns about softening global demand.
By Ben Rooney, CNNMoney.com staff writer
Last Updated: June 19, 2008: 1:10 PM EDT
NEW YORK (CNNMoney.com) -- Oil prices sank nearly $4 Thursday after the Chinese government said it would raise prices on gasoline and diesel, effectively lifting subsides that have been criticized for driving oil prices higher, in a move that could curb demand from the country's rapidly growing economy.
Light, sweet crude for July delivery was down $3.75 at $132.93 a barrel on the New York Mercantile Exchange in midday trading. (= tumble for CNN!!!)
China's National Development and Reform Commission said that prices of gasoline, diesel and aviation fuel will increase by 8% beginning Friday.
"The news out of China surprised the market," Ray Carbone president of Paramount Options, said from the NYMEX floor.
Analysts were expecting China to follow the lead of other oil consuming countries that have lifted subsidies in recent weeks. "But no one expected it before this summer's Olympic games, which is why the market reacted so violently," Carbone said.
Strong demand from China's booming economy has helped support crude prices. A change in the government's policy of controlling gas and diesel prices could mean higher gas prices for Chinese consumers and undercut that demand.
China's decision is a "blow to demand that can't be taken lightly," Carbone said.
By Ben Rooney, CNNMoney.com staff writer
Last Updated: June 19, 2008: 1:10 PM EDT
NEW YORK (CNNMoney.com) -- Oil prices sank nearly $4 Thursday after the Chinese government said it would raise prices on gasoline and diesel, effectively lifting subsides that have been criticized for driving oil prices higher, in a move that could curb demand from the country's rapidly growing economy.
Light, sweet crude for July delivery was down $3.75 at $132.93 a barrel on the New York Mercantile Exchange in midday trading. (= tumble for CNN!!!)
China's National Development and Reform Commission said that prices of gasoline, diesel and aviation fuel will increase by 8% beginning Friday.
"The news out of China surprised the market," Ray Carbone president of Paramount Options, said from the NYMEX floor.
Analysts were expecting China to follow the lead of other oil consuming countries that have lifted subsidies in recent weeks. "But no one expected it before this summer's Olympic games, which is why the market reacted so violently," Carbone said.
Strong demand from China's booming economy has helped support crude prices. A change in the government's policy of controlling gas and diesel prices could mean higher gas prices for Chinese consumers and undercut that demand.
China's decision is a "blow to demand that can't be taken lightly," Carbone said.
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