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Brent oil dropped to the lower end of the $65 to $75 range, that we could see prevail for the remainder of the year. We see reduced risk of a slump below this range on expectations OPEC and friends may step in and announce measures to support the market, potentially by postponing agreed production hikes until a clearer demand picture emerges. Brent oil has been on the defensive this month since the number of Covid-19 cases in China and the U.S. began rising, thereby clouding the demand outlook in the world’s biggest importer and consumer of Brent. 

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Adding to current price risks, apart from demand concerns and the general level of risk adversity sending the dollar higher, was weekly data from the EIA showing US drillers, in response to the earlier price surge, are pumping the most crude in a year. In addition to an expected seasonal slowdown in demand, perhaps strengthened by the Covid-19 surge, and the market is suddenly looking less tight than what was expected just a few weeks ago. 

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