Oil prices went down hard on Friday, with the price of American oil diving below USD 40 per barrel for the first time in a month. The decline follows a sale on the stock exchanges on Wall Street and the value-increasing dollar. There are also concerns on the oil market about the increasing number of local COVID-19 sites in many countries, which could put the demand for oil under pressure again.
The price of a barrel of American oil (159 litres) was more than 4 percent cheaper in New York at 39.71 dollars and Brent oil dropped 3.3 percent to 42.61 dollars per barrel. This puts oil prices on track for the worst week since June. The stronger dollar makes it more expensive for traders with other currencies to buy oil and thus weakens demand. In addition, large oil producers are united in OPEC oil cartel and allies like Russia are in the process of increasing production, which increases supply on the oil market.
Experts also point to the fact that Americans made far fewer trips by car last summer, which is normally a popular activity in the United States. But because of the coronavirus and the restrictions against the virus outbreak, much less car trips were made by Americans, with less fuel demand.