By Scott DiSavino
NEW YORK (Reuters) -Oil prices remained near their lowest levels in three weeks on Thursday as investors weighed mixed U.S. economic data, U.S. sanctions on Venezuela and Iran and easing tensions in the Middle East.
futures fell 18 cents, or 0.2%, to settle at $87.11 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 4 cents, or 0.1%, to settle at $82.73.
That was the lowest closing price for Brent since March 27 for the second day in a row. On Wednesday, WTI also closed at its lowest level since March 27.
Increased interest in energy trading pushed open interest in Brent futures on the Intercontinental Exchange (NYSE:) to the highest level since February 2021 for a second day in a row on Wednesday.
In other energy markets, the drop in U.S. diesel futures to the lowest level since early January has pushed the diesel crack spread, which measures refining profit margins, to its lowest level since April 2023.
In the US, the number of Americans filing new claims for unemployment benefits remained unchanged at low levels last week, pointing to continued strong labor markets.
However, another report showed that existing home sales in the U.S. fell in March as higher interest rates and home prices sidelined buyers from the market.
“This morning’s macroeconomic data was mixed, with initial jobless claims unchanged from the previous week… (while) sales of previously owned U.S. homes fell,” analysts at energy consultancy Gelber and Associates said in a note note.
The resilience of the US labor market, which drives the economy, along with high inflation, has led financial markets and some economists to expect that the US Federal Reserve could delay interest rate cuts until September.
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Lower interest rates would lower financing costs and could stimulate economic growth and oil demand.
In Europe, the European Central Bank has made it clear that a rate cut is coming in June, but policymakers continued to disagree on what steps to take next or how low interest rates can go before they start stimulating the economy again.
In China, the world’s largest oil importer, senior central bank officials said there is still room for the bank to take steps to support the economy, but efforts are needed to prevent cash from flowing through the banking system flows as real credit demand decreases.
The world’s second-largest economy grew faster than expected in the first quarter, but several March indicators such as real estate investment, retail sales and industrial production showed domestic demand in China remains weak.
On the supply side, OPEC member Venezuela lost a key US license that allowed the country to export oil to markets around the world, which will impact the volume and quality of crude oil and fuel sales.
The US also announced sanctions on Iran, another OPEC member, targeting the country’s production of unarmed aircraft following the drone attack on Israel last weekend.
But additional sanctions avoided Iran’s oil industry. Iran is the third largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC), according to Reuters data.
Analysts at energy consultancy Ritterbusch and Associates said sanctions on Venezuela and Iran have already been “largely ignored and shrugged off by the market.”
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Investors had largely trimmed the geopolitical risk premium on oil prices over the last three sessions – during which Brent lost about 3.5% – on the perception that any Israeli retaliation against Iran’s April 13 attack will be tempered by international pressure.
