Anxious consumers, bulging supplies drop oil prices

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.