From Thursday 1 January, the minimum threshold for the current tax levy will be raised from $55 per barrel to $65 per barrel, according to a statement from the Ministry of Finance.
This will be a welcomed relief for producers who have been suffering eroding margins with the recent slide in oil prices.
During Monday’s trading session, the news helped PetroChina shares jump as much as 3.8%, closing at1.7% higher, China Petroleum & Chemical Corp closed at 1.6% higher and CNOOC gained 1.7%.
However, it looks like the euphoria only lasted a day as Chinese oil producers are back under pressure again today and weighing on the Chinese indices, such as China A50.
Other markets have also been dragged down by energy stocks on the back of the further drop in oil prices, pushing new five-year lows. The slide continued last night as West Texas Intermediate fell 2.1% to $53.61 a barrel, while Brent dipped 2.6% to $57.88 a barrel.
On a daily chart, PetroChina broke above its downward channel but appears to be retracing its way down. If the bearish sentiment over oil stocks continues, we are likely to see PetroChina test the support level at $8.00.
Currently any upside is capped by resistance at the $8.80 level, which is also where the 50-day moving average is. The stock will first need to break through these levels in order to gain a sustainable climb.