Oil falls in uncertainty over fuel demand recovery

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Oil prices fell on Friday as investors worried that weakening global economic growth and the tightening of the central bank’s monetary policy could prevent fuel demand from recovering.

July Brent futures fell 63 cents, or 0.56%, to 32 111.41 a barrel by 0432 GMT, while US West Texas Intermediate (WTI) fell 1. 1.36, or 1.21%, to জুন 110.85 on its last day of the previous month.

The WTI contract, which was more actively traded for July, was down 0.82% at 108.99 a barrel.

The International Monetary Fund (IMF) has called on Asian economies to be aware of the risk of spillover from financial austerity.

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Kenji Okamura, the IMF’s deputy managing director, said Asian economies were facing a choice between supporting growth with greater stimulus and withdrawing it to stabilize debt and inflation.

Although the Bank of Japan’s policy has been in stark contrast to the global financial crisis, the central banks of the United States, Britain and Australia have recently raised interest rates.

With crude gains limited this week, Brent and WTI are trading in a range mostly due to uncertain path of demand. Investors, worried about rising inflation and more aggressive measures by the central bank, are reducing exposure to risky assets.

Open interest in WTI futures fell to 1.722 million contracts on May 18, the lowest since July 2016.

“If US growth data continues to be bullish, oil prices could be stuck in a negative stock market feedback loop,” said Stephen Innes, managing director of SPI Asset Management, in a client note.

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In the United States, Americans were getting behind the wheel despite high fuel prices, according to a report on the Federal Highway Administration’s car miles.

In terms of gasoline supply, South Korea’s third-largest refinery, S-Oil, stopped production at its No. 2 alkalization unit and shut down its Onson refinery-related processes due to an explosion.

The shutdown is expected to affect already tight petrol supplies in Asia after one person was killed in an explosion on Thursday night.

City analysts expect S-Oil’s gasoline output to be “severely affected” in the near term, although it may buy alkylates to maintain production.

Iran, meanwhile, is having a hard time selling its crude oil as more Russian barrels are available.

Iran’s crude exports to China have plummeted since the start of the Ukraine war because Beijing favored massive discounts on Russian barrels, storing about 40 million barrels of Iranian oil in tankers at sea in Asia and looking for buyers. (Reporting by Scott Disavino; Editing by Cynthia Osterman and Kim Coggill)



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