Crude oil may have topped out long term as US consumers take start real conservation and India plans to stop petroleum subsidy
Tania Saleem
May 27, 2008

The US drivers drove 11 billion miles less in March 2008 than that of last year.

The final blow off may have taken place. India is planning to end all subsidies to petroleum products. US consumers have started real conservation. China is also tending to end the internal stealth subsidy on oil and gas. That changes the whole equation. While impact of all these will be felt in the next three to six months, the crude futures market has started to look at the future.

The market is saying the driving season in US is going to disappoint. Crude oil traded near a one-week low in New York after plunging yesterday on speculation record fuel prices will reduce demand at the height of the U.S. driving season.

Price of oil fell more than $3 a barrel in the biggest one-day drop since April 29 to close at $128.85. Futures reached $135.09 on May 22, the highest since trading began in 1983, and have doubled in the past year.

Fuel usage in the U.S. averaged 20.3 million barrels a day in the four weeks ended May 16, down 1.3 percent from a year earlier, the Energy Department said last week.

US consumers arte cutting back. People have stopped making unnecessary trips. The trend change in habit always precedes the long-term bear market.

The fact that India and China will soon end the subsidies is the real recipe for the long-term bear market in energy markets.

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