China's economic planning department on Thursday dismissed as a "groundless rumor" reports saying the country might liberalize the prices of refined oil and natural gas soon.

"Those reports and allegations that the government might liberalize oil and gas prices in advance, in June at the earliest, are groundless," an anonymous official with the National Development and Reform Commission (NDRC) told Xinhua.

Thursday's Shanghai Securities News also ruled out the possibility that China will end its grip on prices in the near future.

According to the newspaper, there were news reports on Wednesday alleging that the NDRC, the National Energy Bureau and the country's two largest energy companies, namely PetroChina and Sinopec, were in the final stage of their discussions about the liberalization of the fuel prices.

These reports claimed that the authorities would probably end price control on oil and gas in June, instead of the originally-planned August.

These reports had helped boost the share prices of PetroChina and Sinopec at the Shanghai stock market on Wednesday afternoon. The two stocks gained 9.99 percent and 6.63 percent respectively at the close.

The Shanghai Securities News, citing an official source, dismissed such reports, saying that it was impossible to liberalize oil and gas prices when China was in a critical period of earthquake relief and post-quake reconstruction.

The source said there were several reasons for why the government will not end its grip on oil and gas prices, such as the need to guarantee energy security in post-quake reconstruction and curbing inflation at a time of quake relief and reconstruction.

Another source with the NDRC told the newspaper that the government will absolutely take a risk to liberalize fuel prices in the near future as China needs to reconstruct quake-hit regions under heavy inflation pressure.

In addition, neither PetroChina nor Sinopec said on Wednesday that it had received any notice on the liberalization of oil and gas prices.

Over the last year or so, China has been faced with mounting pressure on inflation.

China's consumer price index, the main gauge of inflation, has risen from above three percent in March last year, to above 6 percent in August, and to 8.5 percent year-on-year last month, as a result of the robust national economy and domestic food price rises coupled with soaring international energy prices.

Also on Wednesday, crude oil prices shattered record highs and soared above US$133 a barrel after a report showed an unexpected drop in the US crude stockpiles.

Light, sweet crude for July delivery rose US$4.19 to settled at US$133.17 a barrel on the New York Mercantile Exchange (NYMEX), trading up US$4.19, the largest one-day price advance since March 26. But prices continued to rise as high as US$133.82 a barrel in the after-hour electronic trading.

In London, Brent crude for July delivery rose US$4.86 to close at US$132.70 a barrel.

On May 12, a 8.0-magnitude earthquake hit the southwest Chinese province of Sichuan, leaving 41,353 people dead nationwide as of noon of Wednesday. Another 274,683 were injured and 32,666 still missing.

(Xinhua News Agency May 22, 2008)