Oil falls $15 on 3-day decline

From wire reports

July 18, 2008

NEW YORK - Oil prices fell below $130 a barrel for the first time in more than a month yesterday, as a dramatic slide entered a third day along with a sharp sell-off in natural gas.

The declines accelerated amid growing concerns about the weakening U.S. economy. "The entire bullish scenario ... is starting to crack," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.

Light sweet crude for August delivery dropped $5.31 to settle at $129.29 a barrel on the New York Mercantile Exchange. Prices have fallen more than $15 in the past three days.

Natural gas futures for August delivery fell more than 8 percent yesterday, marking their biggest one-day drop in nearly a year, according to Nathan Golz, researcher at Wachovia Securities in St. Louis. Prices for the key heating, cooking and power generating fuel have tumbled more than 20 percent since their peak before the Fourth of July, and are now trading at their lowest point since April.

A number of market observers say there was nothing supporting the run-up in natural gas prices, which peaked in early July, and that this week's sell-off of oil has only helped speed the decline.

"The rout in natural gas is pulling oil lower," said Addison Armstrong, director of market research at TFS Energy LLS in Stamford, Conn. "The sheer weight of the decline is bound to impact all the energy markets. A consensus was already forming that prices were too high."

The immediate cause of yesterday's sharp natural gas decline was a larger-than-expected build of U.S. supplies. The Energy Department's Energy Information Administration said in its weekly report that natural gas inventories held in underground storage in the lower 48 states rose by 104 billion cubic feet to more than 2.31 trillion last week. Analysts had been expecting supplies to grow by only 86 billion to 91 billion cubic feet, according to a Platts survey.

Oil futures have dropped almost $18 from last week's record of $147.27 a barrel on signs that consumption in the United States is falling.

The Associated Press and Bloomberg News contributed to this article.

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Oil falls $15 on 3-day decline

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