Why place fuel between Dunkerque's boilers and magazines?

Did Dunkerque use oil to cool its magazines?

Not directly; the oil acted as a barrier between boilers and magazines, a layout the Royal Navy regarded with some caution.

The oil occupies space between the boiler rooms and magazines, separating ammunition from hot machinery. This differs from an active oil-cooling system. British reservations centre on placing combustible fuel between two spaces that could themselves suffer serious accidents. The concern is how the fuel would behave if either adjacent compartment produced heat and blast.