Oil demand falling finally? -- 4/30/2008

Demand for oil fell 8.5% and for gasoline 6.2% in February. This is an extremely dramatic drop in demand, and I would guess that March and April demand is horrendous. To make matters even better for the price of oil, supplies are up and the dollar is either recovering or going flat.

Many have hypothesized that this could be partially an oil bubble and when it pops it is going to fall drastically. If the consumers in the USA and Europe cut back, there can be dramatic supply builds that happen very quickly. We are watching this one closely to see if it is true.

Consumer Confidence Dismal?

What does this lower oil demand mean for other consumer habits? It means that if consumers cut back on gasoline demand, that they are probably scaling back across the board. If they have hit budgtary limits on buying gasoline, they have hit a hard budgetary limit. To make matters worse, all other goods, especially food, are inflating right now.

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