The recent sharp tumble in international crude oil prices is set to give an earnings boost to China's mainland money-losing refiners, but the fate of Sinopec Corp and PetroChina Co is still at the mercy of state policies.

Some experts said the sharp fall in crude had provided China's policy makers with a golden chance to reform the fuel pricing system, which is now designed to shield low-income groups while also causing a supply shortage.

Market observers said China's refining business could turn profitable when crude falls below US$95 a barrel.

Crude contracts in New York rebounded as much as US$3.57 yesterday to around US$95 a barrel after losing more than US$10 in the previous two days against a record level of more than US$147 seen in July.

In London, the Brent crude also tumbled below US$90 mark on Tuesday before bouncing back to around US$93 yesterday.

"The reform of China's fuel pricing system would enter a crude stage if crude could stay below the US$100 level for a longer period," said Han Xuegong, senior consultant at China National Petroleum Corp, the parent company of PetroChina, in Beijing.

China's policy makers have vowed to reform its energy pricing sector by linking domestic gasoline and diesel prices more closely to crude changes. But this would only happen when crude prices were not too high, which would trigger social unrest, or too low, which would not be accepted by oil majors, Han said.

In addition, as China's consumer price inflation weakened to a 14-month low in August, market watchers said the central government could grab the opportunity of falling inflation to expedite reform in the energy sector, including power prices.