Oil falls below $72 as energy supplies grow
NEW YORK — Oil prices fell below $72 a barrel Thursday and natural gas prices tumbled on more evidence of consumer anxiety and also growing supplies of unused crude and natural gas.
Benchmark crude for September delivery lost 3 cents to settle at $71.94 a barrel on the New York Mercantile Exchange. In London, Brent prices fell 68 cents to settle at $74.83 a barrel on the ICE Futures exchange after hitting a new high for the year Wednesday.
Still, crude prices have been rising since mid-July and dragging retail gas prices along.
Prices at the pump have risen every day since July 22, when the national average peaked just above $2.69 per gallon.
Prices added less than a penny overnight to $2.61 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. That’s almost a dime more than last week and gas is now about as expensive as it was at this time last month.
Andrew Lebow, senior vice president and broker at MF Global in New York, said even though crude stockpiles are growing, government reports show demand for gasoline has ticked higher in recent weeks. That counteracted the effects of a stronger dollar, at least on Thursday.
The Labor Department also said Thursday that initial unemployment claims fell more than expected to 550,000 for the week ending Aug. 1. While the total number of people seeking jobless benefits increased, analysts saw the report as fresh evidence that the economy is improving, which may have supported energy prices somewhat.
Crude has traded near $71 a barrel for the last couple days after shooting up from below $62 last week as investors try to gauge whether a weak U.S. economy justifies a further rally.
There is still plenty of crude. Over the past two weeks more than 7 million barrels have gone into storage, rather than being refined into jet fuel, diesel or gasoline.
“Supplies of crude oil are well above seasonal norms … yet our friends, the speculators, still like owning Nymex crude oil, a lot of Nymex crude oil,” said analyst Stephen Schork. “Therefore, once again high prices are becoming the justification for high prices.”
In other Nymex trading, gasoline for August delivery climbed less than a penny to settle at $2.0607 a gallon and heating oil dropped 2.02 cents to settle at $1.9367. Natural gas for August delivery fell about 30 cents to settle at $3.743 per 1,000 cubic feet.
Associated Press writers Pablo Gorondi in Budapest and Alex Kennedy in Singapore contributed to this report.
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