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Oil prices drops on demand concerns and increased supply

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Oil prices slumped on Friday amid worries that demand would recover slower than expected from COVID-19 pandemic lockdowns, while rising supply also overshadowed optimism over falling crude oil and fuel stocks.

The Organization of Petroleum Exporting Countries lowered its oil demand forecast for 2020, OPEC and its allies are increasing production this month.

It is being monitored whether the spread of the coronavirus will continue to affect the return of gasoline and diesel demand.

Brent crude LCOc1 settled at $44.80 a barrel, falling 16 cents. U.S. West Texas Intermediate CLc1 settled at $42.01 a barrel, down 23 cents.

Brent advanced 0.9% and WTI 1.9% for the week.

US crude oil, gasoline and distillate inventories, which fell last week due to increased production and increased demand for petroleum products supported prices at the beginning of the week.

If this trend continues, it supports prices and causes them to rise.

However, the number of US oil and gas rigs, which is an indicator of future supply, fell for the 15th straight week this week.

Oil recovered from April lows, when WTI briefly turned negative. Still, despite the increase in the number of new coronavirus infections, they have limited gains. India reported another daily record increase in cases on Thursday.

OPEC and its allies, including Russia, known as OPEC +, have reduced nearly 10% of pre-epidemic global demand since May to support the market. As demand improves, an increase in production has been called for this month.

The OPEC + panel meets on Wednesday to analyze the market.

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