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Oil dips as recession worries outweigh rising demand forecast By Reuters

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Oil dips as recession worries outweigh rising demand forecast By Reuters

© Reuters. FILE PHOTO: A labyrinth of crude oil pipelines and valves is pictured during a Department of Energy tour of the Strategic Petroleum Reserve in Freeport, Texas, U.S., June 9, 2016.REUTERS/Richard Carson/File Photo

Alasi Somaseka

HOUSTON (Reuters) – Oil prices edged lower on Monday as fears of a possible recession overshadowed increased fuel demand for the upcoming peak U.S. driving season and Shanghai’s planned reopening after a two-month coronavirus lockdown Prospects.

Futures were down 13 cents, or 0.8%, at $112.43 a barrel by 10:46 a.m. ET (1446 GMT). U.S. West Texas Intermediate (WTI) crude fell 52 cents, or 0.5%, to $109.72.

“The dark clouds around the financial markets here are starting to have an impact,” said Bob Yawger, head of energy futures at Mizuho.

“At this point, the economic health of the global economy is questionable,” he added.

Both benchmarks fell after two straight sessions of gains.

Gasoline demand is expected to remain high, limiting losses as the U.S. begins its peak driving season at the Memorial Day weekend at the end of May.

Despite concerns that soaring fuel prices could dent demand, analysts said travel data from TomTom and Google (Nasdaq: ) have climbed in recent weeks, showing more drivers on the road in places like the U.S. .

To address a major supply crunch and rising prices, the White House is weighing an emergency declaration to free diesel from rarely used stocks, an administration official said.

The White House is considering using the Northeast Home Reserve, created in 2000 to help with supply issues and used only once after Hurricane Sandy in 2012. The impact of this release will be limited by the size of the relatively small reserve, which contains only 1 million barrels of diesel.

The EU’s failure to reach a final deal to ban Russian oil in what Moscow called a “special operation” after Russia’s invasion of Ukraine has prevented oil prices from rising sharply. Hungary continues to oppose the proposed ban, ensuring there is no sudden shock to supply for now.

“Continued tightening of U.S. refined petroleum products and ongoing risks to Ukraine/Russia have supported prices,” said Jeffrey Halley, senior market analyst at OANDA.

China’s business hub Shanghai aims to normalize life from June 1 as its number of coronavirus cases declines.

Lockdowns in China, the world’s top oil importer, have hit industrial output and construction, prompting measures to boost the economy, including a sharp cut in mortgage rates on Friday.

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