Gas stations supplied by the Chinese Petroleum Corp (中油) and Formosa Petrochemical Corp (台塑石化) called a truce in their Taipei price war announcing a return to levels prior to last week's drop.
The increases combined with lower international oil prices on eased fears about a US invasion of Iraq and assurances by OPEC about stabilizing lower prices will go some way to erasing losses at the gas stations involved in cut prices.
The move coincided with the revelation that National Petroleum Corp (全國加油站), which operates 67 stations around the island with the majority located in Taipei City and county, will spend NT$120 million on sales promotions later this year.
Eleven gas stations supplied by Chinese Petroleum in northern Taipei last week slashed prices by NT$1 per liter for gasoline products and NT$0.5 for diesel fuel, undercutting Formosa.
Seven gas stations across Taipei supplied by Formosa responded by also dropping prices by a similar margin, maintaining lower prices over Chinese Petroleum.
However according to reports stations supplied by Chinese Petroleum announced a temporary halt to the price war, which was followed closely by a similar announcement made by the Formosa-supplied chains.
A spokeswoman for National Petroleum said the company would not be joining in any price war and would instead focus on winning customers by offering more attractive promotions.
National was likely to spend around NT$120 million on promotions throughout the remainder of the year probably kicking off sometime next month, said the spokesperson.
Some of the financial pain of the lower prices may be alleviated by lowered international oil prices.
Oil prices gave back some gains on Tuesday as OPEC officials sought to assure worried importers that they would not let prices rise out of the group's target range.
New York crude futures lost 45 cents to close at US$28.83 a barrel, down $1.50 from 18-month highs hit last week as fears of a US military assault on Iraq exacerbated fears of tight petroleum inventories ahead of winter.
After close of trade the American Petroleum Institute (API) industry group said US crude oil stocks rose 2.9 million barrels last week, a second consecutive increase from 17-month lows hit earlier this month.
Traders saw the API report -- which also showed a fall in gasoline stocks as the summer driving season nears its end -- as neutral for prices because most of the stock increase was in the isolated West Coast market. October crude was up eight cents at US$28.91 in after-hours trade.
Early gains in regular hours were shed as OPEC President Rilwanu Lukman said the oil exporters' cartel had enough spare output capacity to prevent prices rising above the top end of OPEC's US$22-US$28 per barrel target range.
London benchmark Brent crude futures, opening after a three-day weekend, rose 23 cents to US$27.22 a barrel on Tuesday, catching up with the US market's 65-cent jump on Monday, when the UK was closed for a national holiday.
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