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Oil prices mixed on IMF pessimism and supply constraints

Financial and oil market stability was solidifying up until the Brexit vote, report finds.

By Daniel J. Graeber
Oil prices mixed on IMF pessimism and supply constraints
Oil prices relatively unchanged as security concerns related to oil balance against pessimism expressed by the International Monetary Fund. File photo by Monika Graff/UPI | License Photo

NEW YORK, July 19 (UPI) -- Security concerns in Turkey and Libya balanced against a grim report from the International Monetary Fund, leaving oil prices mixed in early Tuesday trading.

The response to a putsch in Turkey from President Recep Tayyip Erdogan has raised questions about freedoms and the regional stability of the NATO alliance.

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"We will certainly support bringing the perpetrators of the coup to justice, but we also caution against a reach that goes well beyond that and stress the importance of the democratic rule being upheld," U.S. Secretary of State John Kerry said.

About 3 percent of the world's oil moves through the Bosphorus Straits, closed briefly in the wake of the coup. The Libya Herald, meanwhile, reported oil tankers are stranded off the nation's coast because of a strike by workers at an oil terminal. As much as 170,000 barrels per day of oil may be lost because of incidents at the nation's Sarir oil field, the report said.

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Crude oil was volatile in early Tuesday trading following the losses during the previous session. The price for Brent, trading now in the September contract, was up just 0.1 percent at the start of the trading day to $47.01 per barrel. West Texas Intermediate, the U.S. benchmark, was down 0.3 percent to open at $45.09 per barrel, still in the August contract.

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Supply concerns related to insecurity contrasted with a global growth forecast released Tuesday by the International Monetary Fund, its first assessment since the British vote in June to leave the European Union.

The IMF said it reversed course from a 0.1 percent growth forecast from before the so-called Brexit to a downward revision. The report found recovery in financial and crude oil markets gained momentum up to the end of June as most investors assumed the United Kingdom would remain in the EU.

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"The result of the U.K. referendum caught financial markets by surprise," the IMF said.

Among advanced economies, the IMF said the United Kingdom would suffer the most because of the decision to leave the EU. Global growth, meanwhile, was revised lower by 0.1 percent to 3.1 percent for the year.

"Geopolitical tensions, domestic armed strife, and terrorism are also taking a heavy toll on the outlook in several economies, especially in the Middle East," the IMF added.

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