Commodity Daily News

Will Crude Oil Prices Drop to $40 a Barrel?

Crude Oil prices are continuing to slide, breaking recent record lows on a daily basis. It appears that the psychological factor is the strongest reason for the constant drop in Oil prices. For a long time Oil prices were considered to be over-valued. Now Crude Oil seems be the biggest victim of the economic turmoil. Whereas the demand for Oil is only expected to decrease by 2.5%, Oil prices are dropping about 2.5% on a daily basis on average, and have fallen from over $147 a barrel to less than $50 a barrel in the past 5 months.

Another reason for the ongoing depreciation of Crude Oil prices is the massive strengthening of the USD, and it has seemed quite clear that if the EUR/USD will drop to the 1.2000 level, Oil prices will probably drop towards $40 a barrel.

This week traders should follow OPEC announcements in order to predict any price movements for Crude Oil, as production cuts may be in the works. Also, keep a close look on the EUR/USD as any deep changes in that pair will likely impact Oil prices this week.