Oil stabilizes as supply risks meet economic headwinds

Pump jacks work at sunset in an oil field in Midland, Texas, U.S., August 22, 2018. REUTERS/Nick Oxford

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LONDON, May 20 (Reuters) – Oil prices stabilized on Friday, putting them on track for little change over the week, as a planned European Union ban on Russian oil balanced prices. demand concerns about slowing economic growth.

Brent crude futures for July fell 18 cents, or 0.2%, to $112.22 a barrel as of 12:35 GMT, while U.S. West Texas Intermediate (WTI) crude for June fell 2 cents at $112.19 on the last day of the first month.

The most actively traded WTI contract for July fell 14 cents to $109.75 a barrel.

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The International Monetary Fund has urged Asian economies to be aware of the contagion risks of monetary tightening, with IMF deputy managing director Kenji Okamura saying they face a choice between supporting growth with more stimulus and withdrawing it to stabilize debt and inflation. Read more

While Bank of Japan policy works against a global shift to monetary tightening, central banks in the United States, Britain and Australia have recently hiked interest rates.

Despite rising fuel prices, however, Americans were getting back behind the wheel, according to a Federal Highway Administration report on vehicle miles traveled. Read more

“There are so many forces at play at the minute and the heightened economic gloom this week and the progress of China’s reopening has only added to that,” said Craig Erlam, senior market analyst at OANDA.

“The risks, however, remain tilted to the upside given China’s reopening and the EU’s continued push for a Russian oil embargo.”

The EU hopes to strike a deal on a proposed Russian crude import ban, which includes exclusions for EU states most dependent on Russian oil, such as Hungary. Read more

“The chances of an EU embargo being declared sooner rather than later have increased following Germany’s success in more than halving Russian oil imports in a very short period of time,” the firm said. BCA Research consultancy in a note.

“Further reductions in German imports of Russian oil will make it easier for the EU’s largest economy to withdraw from imports of Russian crude and products sooner rather than later.”

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Additional reporting by Scott DiSavino; Editing by Frank Jack Daniel, Jason Neely and Alexander Smith

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