Oil drops to $101 per barrel, natural gas near $2

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By CHRIS KAHN, Associated Press

NEW YORK (AP) — Oil closed at a two-month low on more troubling signs for the world economy.

Benchmark U.S. crude dropped by $1.44 to $101.02 per barrel in New York on Tuesday while Brent crude lost $2.79 to $119.88 per barrel in London. Natural gas fell to a 10-year low. Global stock markets also declined, along with the prices of most industrial metals.

There was fresh concern about economic strength in China and the U.S. China said that European demand for its manufactured goods is declining — one more sign of a slowdown in the world's second-biggest economy. A U.S. government report indicated that wholesalers are restocking shelves at a slower pace. That will likely hurt first-quarter economic growth.

After months of focusing on the West's nuclear dispute with Iran, oil traders are more worried about the impact of high oil prices on the economy, analysts say. The concern appears warranted. Small business owners in the U.S. said in a survey released Tuesday that they're increasingly worried about high fuel prices.

This all follows last week's disappointing U.S. jobs news. The government said that employers added only 120,000 jobs in March — half as much as the previous three months.

Oil is now the closest it's been to $100 since Feb. 13. The price has dropped $6 per barrel, or 5.6 percent, in the last two weeks.

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The air is slowly being leaked out of this bubble that's grown over the past few months" in oil prices, independent trader and analyst Stephen Schork said.

Natural gas is also closing in on an important level: $2. The futures price dropped 7.6 cents to $2.031 per 1,000 cubic feet. A drop below $2 would be the first in more than 10 years. The price has tumbled 32 percent this year because of a production boom that's kept the nation's stockpiles well above normal levels.

Retail gasoline prices fell less than a penny overnight to a national average of $3.922 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

In other energy trading, heating oil gave up 5.02 cents to $3.096 per gallon and gasoline futures lost 4.71 cents to $3.2496 per gallon.

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