DIESEL DEMAND

Wall Street journal reports a 3.3% decrease in fuel consumption on the American market compared to last years figures. Even though the demand on fuel has gone down, the prices at the pumps are still high.

The problem is that the demand for diesel has increased 6% compared to last years figures keeping the demand for oil at a staggering level. From the beginning of this year gasolin has seen a 30% increase in price while diesel has had a 65 % increase. So when will it end? When will the prices go down?

Michael Waldron from the Lehman Brothers say that "We think oil is set for a significant correction, but it's not likely to occur before the end of this year, or the beginning of next year"

This is based on the speculation that governments will reduce the subsidies that has kept the fuel prices down so far. Another factor that can deflate the fuel prices is the fight against the high inflation that has festered itself over the American economy. This fight will start with a rent increase from the Fed's, making the dollar stronger. As the dollar gains strength, the benefits of a low dollar in the oil exchange disappears, and the demand will slowly go down. The correction of the mighty dollar will come as soon as the financial market calms down and gains faith from the market. When that will happen is still unsure.