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Oil extends declines amid signs of weak fuel demand

Oil trades

Brent crude futures slipped 7 cents, or 0.1%, to $82.72 a barrel, while U.S. WTI crude futures were at $78.21 a barrel, down 5 cents

Oil prices extended declines on Monday amid signs of weak fuel demand and as comments from U.S. Federal Reserve officials dampened hopes of interest rate cuts, which could slow growth and restrict the use of energy in the world’s biggest economy.

Brent crude futures slipped 7 cents, or 0.1%, to $82.72 a barrel by 0624 GMT, while U.S. WTI crude futures were at $78.21 a barrel, down 5 cents.

Oil markets shrugged off the impact of the Middle East conflicts and shifted their attention to the world economic outlook again, according to Auckland-based independent analyst Tina Teng.

China’s producer price index (PPI) declined in April, suggesting that business demand remained sluggish, she said, adding that recent U.S. economic data indicated a slowdown as well.

Both benchmarks settled nearly $1 lower on Friday as Fed officials debated whether U.S. interest rates are high enough to bring inflation back to 2%, offsetting gains earlier last week over concerns of supply disruptions from the Middle East conflict.

Analysts expect the Fed to keep its policy rate at the current level for longer, supporting the dollar. A stronger greenback makes dollar-denominated oil more expensive for other currency holders.

Oil prices also dropped amid signs of weak demand, ANZ analysts said in a note, as U.S. gasoline and distillate inventories rose in the week ahead of the start of the U.S. driving season.

Refiners globally are struggling with slumping profits for diesel as new refineries boost supplies and as mild weather in the northern hemisphere and slow economic activity impact demand.

Still, the market remained supported by expectations that the OPEC+, could extend supply cuts into the second half of the year.

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