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NEW YORK (Reuters) - Crude oil held steady on Thursday while U.S. gasoline futures tumbled for a fourth straight day as concerns about a supply crunch on the East Coast eased.
Oil balanced between downbeat U.S. economic data and persistent, though receding, supply disruption worries as Iran and world powers wrangle over Tehran's nuclear program.
Gasoline futures extended losses to more than 6 percent over the past five days on expectations by traders and analysts that the idled ConocoPhillips' (COP.N) 185,000 barrels per day refinery in Trainer, Pennsylvania, was likely to be sold soon to Delta Air Lines (DAL.N).
"Gasoline futures had risen sharply on fears of a shortfall in East Coast refinery capacity, but news about the Trainer refinery is changing that perception," said Tim Evans, energy analyst at Citi Futures Perspective in New York.
U.S. crude fell sharply in early trade after economic data from the No. 1 oil consumer showed that jobless benefit claims dipped less than forecast, while existing home sales fell unexpectedly and mid-Atlantic factory activity slipped.
The losses followed a sharp decline on Wednesday, when U.S. government data showed that U.S. crude inventories rose last week for the fourth straight week.
The report offset supply concerns due to a series of disruptions across the globe this year, as well as worries about the potential loss of oil from Iran due to EU and U.S. sanctions against Iran set to take effect this summer.
On Thursday, Brent rose early as investors grew less worried about the euro zone on news of strong investor demand for Spanish bonds. It recovered late in the session as investors said they remained skeptical about Spain's fiscal outlook. <MKTS/GLOB>
In London, Brent crude for June delivery settled at $118 a barrel, managing to gain 3 cents, after falling to a session low of $117.68. On Wednesday, it dropped as low as $116.70, the lowest intraday price for front-month Brent since February 10.
U.S. May crude, which expires on Friday, settled at $102.27, down 40 cents. In late trade, it broke below the 100-day moving average of $101.92, then extended the session low to $101.67, lowest since April 11.
U.S. June crude also closed down 40 cents at $102.72.
June Brent's premium against the U.S. June crude contract widened to $15.28, from $14.85 on Wednesday. The spread shrunk to $12.99, the narrowest since February 1, on Wednesday, on expectations that an oil glut in the U.S. Midwest would ease with an earlier-than-scheduled plan to reverse the flow of the Seaway crude pipeline.
Brent's trading volume again outpaced U.S. crude and was near its 30-day average, Reuters data showed. U.S. crude trading volume was down almost 16 percent from the 30-day average.
U.S. RBOB May gasoline closed down 4.86 cents at $3.1541 a gallon. In five days, it has fallen more than 20 cents or 6.05 percent.
Initial claims for U.S. state unemployment benefits slipped 2,000 to a seasonally adjusted 386,000, the Labor Department said. The prior week's data was revised to show 8,000 more applications received than previously reported.
Other data showed factory activity in the Mid-Atlantic region slowed sharply this month and home resales dropped for a second straight month in March.
"The jobless claims numbers as well as housing sales data were not supportive, adding to yesterday's bearish data on the U.S. crude stock build," said Kyle Cooper, managing partner at IAF Advisors in Houston, Texas.
Oil investors were awaiting next week's meeting of U.S. Federal Reserve policymakers, which will be closely scrutinized for any hints of a third round of monetary easing, which could have an impact on oil prices.
"I see the current U.S. crude price range moving at $10 on either side of $100 and the market is waiting for any break in developments over Iran's talks with world powers or other news that could affect the oil markets strongly," Cooper said.
Iran will again meet with world powers on May 23 in Baghdad in a second round of talks about its disputed nuclear program, The tensions spawned by that program between Tehran and the West had boosted oil prices to the years' highest level, in March.
Global demand worries persisted, making oil investors more cautious.
The global economy is set to expand by just a modest 3.3 percent this year as a still-smouldering euro zone debt crisis and a relatively slow U.S. recovery continue to leave Asia as the main driver for Growth, Reuters polls showed. <ID: nL3E8FJ3QL> <ECILT/LTAM>
Additional reporting by Robert Gibbons in New York, Simon Falush in London; Editing by Marguerita Choy and David Gregorio