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Gas prices drop for 25 straight days

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Retail gas prices dropped Thursday for the 25th consecutive day as America's appetite for petroleum hovers around 10-year lows.

"Demand is about as poor as it's been in a long time," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

The steady drop in pump prices follows almost two months of daily price increases. The rally in gas prices, which peaked on June 21 at $2.693 a gallon, lost steam as more Americans stayed home during the traditional summer driving season. Investors who had pumped millions of dollars into gas futures also started to realize that supply shortages weren't around the corner as expected, Kloza said.

On Thursday, 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.

Meanwhile, oil prices ticked higher after China said its economy grew faster in the second quarter while the U.S. government reported a dip in unemployment numbers.

Benchmark crude for August delivery added 48 cents to settle at $62.02 a barrel on the New York Mercantile Exchange. In London, Brent prices lost 34 cents to settle at $62.75 a barrel on the ICE Futures exchange.

Natural gas prices surged nearly 12 percent even though the government reported that stockpiles remained well above their five-year average. The build for the week ended July 10 was at the lower end of expectations, but analysts said that didn't justify such a huge jump in prices.

Instead, they suggested that speculators, including companies and hedge funds that buy energy commodities, were likely repositioning themselves in the market.

Natural gas for August delivery jumped 38.5 cents to settle at $3.668 per 1,000 cubic feet.

Earlier in the day, the Labor Department said new applications for unemployment insurance dropped to their lowest level since early January. However, 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.

Also, 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 lead other major countries out of the global recession. But its growth rate so far hasn't inspired traders to invest much 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."

In other Nymex trading, gasoline for August delivery added less than a penny to settle at $1.7135 a gallon, and heating oil for August delivery climbed 1.73 cents to settle at $1.5994 a gallon.

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Associated Press writers Ernest Scheyder in New York, George Jahn in Vienna, Austria and Alex Kennedy in Singapore contributed to this report.