Price of oil falls slightly after storage report

updated 11:32 a.m. ET July 16, 2009

NEW YORK - Oil prices wavered Thursday as investors wrestled with a mix of economic news including a dip in jobless claims and storage reports showing America’s appetite for petroleum hovers around 10-year lows.

Benchmark crude for August delivery fell 28 cents to $61.26 a barrel on the New York Mercantile Exchange. In London, Brent prices also lost 28 cents at $62.81 a barrel on the ICE Futures exchange.

Oil prices peaked above $73 a barrel at the end of June. They started falling well before the end of the July 4 holiday as unemployment numbers and other government data suggested an economic recovery was still far off.

Economic reports released Thursday didn’t add much clarity.

The Labor Department said new applications for unemployment insurance dropped to their lowest level since early January. But a department analyst said the drop reflected problems adjusting for layoffs in the auto industry, and it wasn’t necessarily a sign of an improving economy.

Meanwhile, government reports continued to show U.S. storage facilities were bloated with excess supplies.

The Energy Information Administration said Thursday that natural gas stockpiles remained well above their five-year average as expected, growing to about 2.89 trillion cubic feet for the week ended July 10. The build was at the lower end of what analysts had expected.

After the report, natural gas for August delivery surged 33.4 cents, more than 10 percent, to $3.617 per 1,000 cubic feet.

Earlier in the day, China reported its economy grew in the second quarter, rising 7.9 percent compared with a year ago. Analysts said the world’s third-largest economy should reach its target of 8 percent growth for the entire year.

China is expected to be the first major country to pull itself out of the global recession. But its growth rate so far hasn’t inspired traders to invest more in energy futures, analyst Phil Flynn said.

“It wasn’t a blowout number,” Flynn said of China’s economic report. “We’re kind of just marking time today.”

At the pump, retail gas prices fell 1.2 cents to a new national average of $2.492 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of gas is 18.2 cents cheaper than a month ago and $1.622 cheaper than last year.

In other Nymex trading, gasoline for August delivery dropped less than a penny at $1.702 a gallon, and heating oil for August delivery climbed less than a penny to fetch $1.5886 a gallon.

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