US Natural Gas Inventories Rise

NEW YORK - Crude oil fell more than $5 a barrel, dropping below $130 for the first time in six weeks, as global economic growth slows. Natural gas dropped more than 7 percent after a government report showed US supplies rose a greater-than-forecast 104 billion cubic feet last week. Some users can switch between oil-based fuels and gas depending on cost. Oil also fell because of reports showing the US and Chinese economies are slowing.

"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 [energy] prices were too high."

Crude oil for August delivery fell $5.31, or 4 percent, to settle at $129.29 a barrel on the New York Mercantile Exchange, the lowest close since June 5. Futures are up 75 percent from a year ago.

Futures have dropped almost $18 from last week's record $147.27 a barrel on signs that US consumption is falling. Oil is down 11 percent since July 14, the biggest three-day drop since December 2004.

Prices closed below the 50-day moving average for the first time since Feb. 8, an indication the bull market may be coming to an end. Traders use moving averages of different periods in conjunction with other statistical patterns for buying and selling decisions.

Oil also fell because August options expired at the close of Nymex trading yesterday. August $130 puts, which represent the right to sell at that price, were the most actively traded options contract on the Nymex yesterday.

Natural gas for August delivery declined 86.1 cents, or 7.6 percent, to settle at $10.54 per million British thermal units in New York, the lowest close since April 17.

US natural gas inventories were forecast to increase 88 billion cubic feet in the week ended July 11, according to the median of responses from 22 analysts surveyed by Bloomberg News.

China's economic expansion cooled to the slowest pace since 2005 as gross domestic product grew 10.1 percent in the second quarter from a year earlier, down from 10.6 percent in the first quarter, the statistics bureau said yesterday in Beijing.