NEW YORK — The price of oil dropped below $100 per barrel for the first time since February. The dramatic drop — down $5 per barrel by midday — is easing fears that high energy prices would cripple a U.S. economy that is struggling to overcome high unemployment, stagnant wages and weak growth.
The catalyst was Friday's weaker than expected report on job growth in the U.S. that added to recent signs that the global economy is weakening, meaning demand for oil should slow.
Earlier this year, world oil demand looked to be rising quickly at the same time that world supplies were threatened by a host of small production outages and the prospect of drastically reduced production from Iran, the world's third biggest exporter.
Those developments raised the prospect that world supplies would be at their most tenuous just as the summer driving season in the developed world was arriving. The price of the U.S. benchmark oil rose to $110. International oil spiked even higher, to $128 per barrel.
Gasoline prices in the U.S. appeared to be on track to soar past $4 per gallon nationwide and break the 2008 record of $4.11.
That picture has now been turned upside down. World oil supplies are growing while demand is falling. U.S. gasoline prices have fallen to $3.80 per gallon from a peak of $3.94 in early April. Now they could go as low as $3.50 per gallon by July 4, according to Tom Kloza, chief oil analyst at the Oil Price Information Service.
On Friday, Benchmark West Texas Intermediate crude fell $4.83 to $97.70 in afternoon trading Friday. That's a drop of 4.7 percent.
Oil prices have been falling since Wednesday because of a renewed focus on the economy. The Labor Department said Friday that the U.S. economy added just 115,000 jobs in April — far fewer than the pace of hiring earlier this year. Government data show that U.S. oil consumption dropped 5.3 percent in the first quarter. Meanwhile, supplies have been growing for the past six weeks and hit a 22-year high in Cushing, Okla., where benchmark crude is delivered.
The European economy also is slowing down as governments on that continent struggle with oppressive debt.
"We're fearful that the economy is slowing more than we originally thought," PFGBest analyst Phil Flynn said.
U.S. oil prices haven't dropped this much since Dec. 14, 2011, when the benchmark price fell by $5.19, or 5.2 percent, to $94.95 per barrel.
The price of the U.S. benchmark crude has crossed the $100 mark 21 times during the past year. It rose as high as $109.77 on Feb. 24 this year. Last year it rose to $113.93 per barrel April and fell as low as $75.67 per barrel on Oct. 4.
In other futures trading, heating oil lost 5.12 cents to $3.0357 per gallon, wholesale gasoline lost 4.55 cents to $3.0045 per gallon, and natural gas lost 4.6 cents to $2.294 per 1,000 cubic feet. Brent crude, which is used to set the price of oil imported into the U.S., lost $1.98 to $114.10 per barrel.