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Oil tumbles as drop in Chinese exports signals weaker energy demand in sluggish global economy
NEW YORK (AP) ' The price of oil fell nearly 2 percent Thursday as the global economic slowdown took a toll on China.
China, the world's second-largest oil consumer behind the U.S., has been propping up oil demand as its economy expanded. But a drop in its export growth last month showed that it's been affected by the sluggish U.S. and European economies. Consumers are spending less and buying fewer Chinese products. If China's exports continue to cool off, its economy will slow and its appetite for oil will diminish.
"We're interconnected," independent analyst Andrew Lipow said. "A slowdown in consumption in the U.S. and Europe is being felt over there."
Benchmark crude fell $1.34 to end the day at $84.23 a barrel in New York. Brent crude, used to price many international kinds of oil, fell 25 cents to finish at $111.11 a barrel in London.
Earlier this week the International Energy Agency, the Organization of Petroleum Exporting Countries and the U.S. Energy Information Administration all dropped forecasts for oil demand in 2012. Those revisions were based primarily on the expectation that the U.S., Europe and other developed nations would use less as their economies slowed down.
The most recent economic data in the U.S. showed little sign that the economy was picking up steam. The number of people applying for unemployment benefits fell slightly last week, but not by enough to signal job growth.
And the Energy Department said that oil and natural gas supplies grew unexpectedly last week, while refineries slowed down and gasoline supplies dropped ' all indications of soft demand.
In other energy commodities trading, heating oil added 3.67 cents to finish at $2.9714 per gallon and gasoline futures added less than a penny to end at $2.7575 per gallon. Natural gas rose 4.2 cents to finish the day at $3.531 per 1,000 cubic feet.