China, Asia’s biggest oil consumer, increased retail gasoline and diesel prices for the first time this year, aiding state refiners under pressure from $100 crude and prompting bets further increases will come.

Shares in China Petroleum & Chemical Corp., the nation’s biggest refiner, rose as much as 2 percent in Hong Kong and 1.3 percent in Shanghai.

“The price hike will offset some of the cost pressure on state refiners,” Yin Xiaodong, chief oil analyst at Citic Securities Co., said by telephone from Beijing.

“The government should increase fuel prices by 500 yuan or more based on how much crude has gained, but this still shows the government is implementing the new fuel pricing mechanism.”

Gasoline and diesel yesterday rose by 350 yuan ($53) a metric ton, or as much as 4.6 percent, the National Development and Reform Commission, the top economic planner, said on its website on Feb. 19. The retail price of 90-octane gasoline is now $1.018 a liter in Beijing and $1.016 a liter in Shanghai. The average cost of gasoline in the U.S. is 84 cents a liter.

The government boosted prices after crude in London rose above $100 a barrel as civil unrest in the Middle East threatens to disrupt supplies. China last increased prices, by 4 percent, on Dec. 22. Brent crude on the ICE Futures Europe exchange in London has climbed 9.5 percent since then, reaching a 2 1/2-year high last week.

The NDRC said in its statement that it limited the fuel price increase in consideration of social affordability, forcing refineries to absorb some gains in crude costs.

“This isn’t enough if we benchmark against how crude has risen. We’ll need another price increase,” Brynjar Eirik Bustnes, an analyst at JPMorgan Chase & Co., said by telephone from Hong Kong. “This one will allow refiners to avoid bigger losses but certainly it’s not going to give them profits.”

Based on a mechanism introduced in December 2008, the NDRC can revise fuel prices when crude costs change by more than 4 percent over 22 working days.

China may raise gasoline and diesel prices by 20 percent this year to preserve Sinopec’s refining margins, according to Mirae Asset Securities Co., which rates the stock a ‘buy’ and raised its target price today by 37.5 percent to HK$11.

Sinopec rose as much as 2 percent to HK$8.71 in Hong Kong today and traded at HK$8.56 at 11.30 a.m. The shares traded at 9.23 yuan in Shanghai after climbing as high as 9.26 yuan.

Higher gasoline and diesel prices may strain drivers who barely two years ago paid less than Americans to fill their tanks. China is the world’s biggest new-car market.

Rising fuel prices also risk boosting consumer-price inflation, which accelerated to 4.9 percent in January from 4.6 percent in December. The latest increase may add 8 basis points to the consumer price index in February, Lu Zhengwei, a Shanghai-based economist at Industrial Bank Co., said in an e-mailed note Sunday. 

(Bloomberg)