Updated from 12:50 p.m. EDT

Energy futures are sharply lower in Monday's session at the New York Mercantile Exchange, on perceived weakness in petroleum product markets.

September light sweet crude dropped $3.42 to $72.06 a barrel. Reformulated gasoline is off 10 cents at $1.93 a gallon. Heating oil lost 10 cents to $1.94 a gallon.

The near-term natural gas contract gained 12 cents to $6.21 per million British thermal units.

Crude is being pulled lower by a $3.78 drop in gasoline crack spreads and a similar-size drop in heating oil spreads.

According to Thomas Hartmann, analyst at Altavest Worldwide Trading, crude is reeling from the after-effects of last week's losses in global equity markets. "There is a perceived notion that we could be looking at a slowdown in the global economy. This would have an immediate impact on the demand for crude oil and refined products," says Hartmann.

Even though oil has fallen sharply from its highs reached last week, the decline has not yet permanently damaged the bull market for crude oil, Hartmann says. "Crude could fall as low as $70 and still remain bullish. The market still respects the fact that peak hurricane season remains ahead of us," he says.

Meanwhile, oil stocks are mixed in a volatile day of trading. The

CBOE Oil Index

is down 0.1% at 715.93.

Oppenheimer downgraded several energy stocks to neutral from buy. Among those on Oppenheimer's list,

BP

(BP) - Get BP p.l.c. Sponsored ADR Report

remains fractionally higher at $66.99,

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Chevron

(CVX) - Get Chevron Corporation Report

slid 0.3% to $80.80 and

ConocoPhillips

(COP) - Get ConocoPhillips Report

gained 0.4% to $77.93.

Tesco

(TESO)

was upgraded by CapitalOne Southcoast to buy from hold. The stock was down 15 cents to $30.68.

Mariner Energy

( ME) was upgraded by Calyon Securities to buy from add, as shares gained 45 cents to $20.37.

Goodrich Petroleum

(GDP) - Get Goodrich Petroleum Corporation Report

was upgraded by Jefferies & Co. to buy from underperform, sending its shares up 2.1% to $32.26.