Oil prices steady as mixed US economic news offsets new EU sanctions on Russia
Brent crude futures fell 15 cents, or 0.2%, to $69.37 a barrel by 11:22 a.m. EDT (1522 GMT), while U.S. West Texas Intermediate (WTI) crude futures fell 16 cents, or 0.2%, to $67.38.
That kept both crude benchmarks on track to lose about 1% this week.
In the United States, single-family homebuilding dropped to an 11-month low in June as high mortgage rates and economic uncertainty hampered home purchases, suggesting residential investment contracted again in the second quarter.
In another report, however, U.S. consumer sentiment improved in July, while inflation expectations continued to decline.
Lower inflation will make it easier for the U.S. Federal Reserve to reduce interest rates, which should boost economic growth by making it cheaper for consumers to borrow money. Stronger economic growth should also boost energy demand.
In Europe, the EU reached an agreement on an 18th sanctions package against Russia over its war in Ukraine, which includes measures aimed at dealing further blows to Russia's oil and energy industries.
The EU will set a moving price cap on Russian crude at 15% below its average market price, EU diplomats said, aiming to improve on a largely ineffective $60 cap that the Group of Seven major economies have tried to impose since December 2022.
"New sanctions on Russian oil from the U.S. and Europe this week were met by a muted market reaction," analysts at Capital Economics said in a note. "This is a reflection of investors doubting President (Donald) Trump will follow through with his threats, and a belief that new European sanctions will be no more effective than previous attempts."
"We expect weak demand fundamentals to reassert themselves this year and to push Brent crude prices down to $60 (a barrel) at the end of the year," Capital Economics said.
The EU will also no longer import any petroleum products made from Russian crude, though the ban will not apply to imports from Norway, Britain, the U.S., Canada and Switzerland, EU diplomats said.
EU foreign policy chief Kaja Kallas also said on X that the EU has designated the largest Rosneft (ROSN.MM), opens new tab oil refinery in India as part of the measures.
India is the biggest importer of Russian crude while Turkey is the third-biggest, Kpler data shows.
Europe produces less diesel and jet fuel than it consumes, making it reliant on imports from other regions.
Those EU bans on refined products imports helped boost U.S. and European diesel and gasoil futures.
In the United States, higher diesel prices in recent days boosted the diesel crack spread to its highest since February. Crack spreads measure refining profit margins.
"This shows the market fears the loss of diesel supply into Europe, as India had been a source of barrels," said Rystad Energy's vice president of oil markets, Janiv Shah.
In other news, U.S. oil major Chevron (CVX.N), opens new tab closed its $55 billion acquisition of U.S. energy firm Hess (HES.N), opens new tab on Friday after winning a landmark legal battle against larger U.S. oil major rival Exxon Mobil (XOM.N), opens new tab to gain access to the largest oil discovery in decades off Guyana.
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