Oil steadies as supply risks encounter economic headwinds

Representative image (Photographer: Andrey Rudakov/Bloomberg)

Oil prices steadied on Friday, setting them on course for little change on the week, as a planned European Union ban on Russian oil balanced demand concerns over slowing economic growth.

Brent futures for July were down 18 cents, or 0.2%, to $112.22 a barrel by 1235 GMT, while U.S. West Texas Intermediate (WTI) crude for June fell 2 cents to $112.19 on its last day as the front-month.

The more actively traded WTI contract for July was down 14 cents at $109.75 a barrel.

The International Monetary Fund urged Asian economies to be mindful of spillover risks from monetary tightening, with IMF Deputy Managing Director Kenji Okamura saying they faced a choice between supporting growth with more stimulus and withdrawing it to stabilise debt and inflation.

While Bank of Japan policy runs counter to a global shift towards monetary tightening, central banks in the United States, Britain and Australia raised interest rates recently.

Despite higher fuel prices, however, Americans were getting back behind the wheel, according to a report from the Federal Highway Administration on vehicle miles.

"There are just so many forces at play at the minute and the increased economic gloom this week and Chinese reopening progress has only added to that," said Craig Erlam, a senior market analyst at OANDA.

"The risks remain tilted to the upside though given the Chinese reopening and continued efforts towards a Russian oil embargo by the EU."

The EU is hoping to clinch a deal on a proposed ban of Russian crude imports which includes carve-outs for EU states most dependent on Russian oil such as Hungary.

"Odds of an EU embargo being declared sooner rather than later increased in the wake of Germany's success in cutting Russian oil imports by more than half in a very short period," consultancy BCA research said in a note.

"Further reductions in Germany's imports of Russian oil will make it easier for the EU's largest economy to walk away from Russian crude and product imports sooner rather than later."