Oil steadies as economic growth worries counter supply risks

© Reuters. FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford

By Scott DiSavino

NEW YORK (Reuters) -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 concerns that slowing economic growth will hurt demand.

Brent futures for July delivery rose 2 cents to $112.06 a barrel by 11:07 a.m. EDT (1507 GMT), while U.S. West Texas Intermediate (WTI) crude for June rose 22 cents, or 0.2%, to $112.43 on its last day as the front-month.

The more actively-traded WTI contract for July was down about 0.1% to $109.88 a barrel.

That put WTI up for a fourth week in a row for the first time since mid February, while Brent was up less than 1% after falling less than 1% last week.

Crude gains were limited this week due to the uncertain path of demand. Investors, worried about rising inflation and more aggressive action from central banks, have been reducing exposure to riskier assets.

Open interest in WTI futures on the New York Mercantile Exchange fell to 1.712 million contracts on Thursday, the lowest since July 2016 for a second day in a row.

"The risks remain tilted to the upside ... given the Chinese reopening and continued efforts towards a Russian oil embargo by the EU," said Craig Erlam, a senior market analyst at OANDA.

In China, Shanghai did not signal any change to its planned end of a prolonged city-wide lockdown on June 1 even though the city announced its first new COVID-19 cases outside quarantined areas in five days.

The energy market expects the lifting of some coronavirus restrictions in Shanghai to boost energy demand. China is the world's top crude importer.

The European Union 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.

German big business is drafting a plan to use an auction system to help ration available supplies in the event Russia cuts off its gas, although some fear it could punish smaller firms.

In India, crude oil imports in April were the highest in 3-1/2 years as the world's third biggest oil importer and consumer ramped up discounted Russian oil purchases to fuel demand recovery and fight high prices.

The Emir of Qatar Tamim bin Hamad al-Thani expressed optimism that an agreement between the United States and Iran could be achieved, voicing readiness to help in the matter.

Analysts said an agreement with Iran could add another 1 million bpd of oil supply to the market.

In the United States, Americans continued to get behind the wheel even though gasoline prices at the pump keep hitting record highs. Auto club AAA said regular unleaded gasoline hit a record $4.59 per gallon on Friday.