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NEW YORK: Oil prices plummeted more than 3% on Friday as global recession fears and weak oil demand, especially in China, outweighed support from a large cut to the OPEC+ supply target.

Brent crude futures dropped $2.94, or 3.1%, to settle at $91.63 a barrel, while US West Texas Intermediate (WTI) crude futures fell $3.50, or 3.9%, to $85.61.

The Brent and WTI contracts both oscillated between positive and negative territory for much of Friday but fell for the week by 6.4% and 7.6%, respectively.

US core inflation recorded its biggest annual increase in 40 years, reinforcing views that interest rates would stay higher for longer with the risk of a global recession. The next US interest rate decision is due on Nov. 1-2.

US consumer sentiment continued to improve steadily in October, but households’ inflation expectations deteriorated a bit, a survey showed.

The improvement in consumer sentiment “is being viewed as a negative because it means the Fed needs to break the spirit of the consumers and slow the economy down more, and that’s caused an increase in the dollar and downward pressure on the oil market,” said Phil Flynn, analyst at Price Futures Group in Chicago.

The US dollar index rose around 0.8%. A stronger dollar reduces demand for oil by making the fuel more expensive for buyers using other currencies.

In US supply, energy firms this week added eight oil rigs to bring the total to 610, their highest since March 2020, energy services firm Baker Hughes Co said.

China, the world’s largest crude oil importer, has been fighting COVID-19 flare-ups after a week-long holiday. The country’s infection tally is small by global standards, but it adheres to a zero-COVID policy that is weighing heavily on economic activity and thus oil demand.

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