Crude oil fell to a four-week low as milder-than-average U.S. temperatures trumped concern about diminishing inventories in the world's biggest energy consumer.

Temperatures will be higher than normal in most of the country from Jan. 2 through Jan. 6, according to the U.S. National Weather Service. U.S. crude supplies have declined 20.2 million barrels since Nov. 17, the biggest five-week drop since September 2005, when hurricanes damaged oil facilities in the Gulf of Mexico, according to yesterday's Energy Department report.

``Most market participants are far more concerned by the milder weather in the U.S., which is expected to continue throughout the rest of the winter,'' said Michael Davies, an analyst in London with commodities broker Sucden (U.K.) Ltd.

Crude oil for February delivery fell as much as 54 cents, or 0.9 percent, to $59.99 a barrel on the New York Mercantile Exchange, the lowest since Nov. 27. The contract traded at $60.03 at 1:57 p.m. London time. Brent crude oil dropped 58 cents to $60.09 a barrel on the London-based ICE Futures exchange.

The price of the near-month contract has averaged $66.23 a barrel this year, 17 percent higher than in 2005. Supply disruptions in Nigeria and Iraq, and concern Iran would curb shipments because of the confrontation over the country's nuclear program, caused New York-traded crude to reach a record of $78.40 a barrel on July 14.

The three countries were responsible for 9.6 percent of global output last year, according to the International Energy Agency.

Crude oil was little changed after falling to a one-month low as mild weather in most of the U.S. reduced heating-fuel consumption.

Higher-than-normal temperatures will cover most of the lower 48 states from Jan. 1 through Jan. 5, the U.S. National Weather Service said. Natural gas, a competing fuel, plunged 13 percent in three sessions on the warm weather. Some users switch between natural gas and fuels refined from crude oil based on cost.

``As long as the weather is mild the market is going to test the lower end of the recent trading range,'' said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis.

Crude oil for February delivery fell 10 cents to $61 a barrel at 11:47 a.m. on the New York Mercantile Exchange. The contract touched $60.28, the lowest since Nov. 28. Prices tumbled 2.1 percent yesterday, the biggest one-day decline since Nov. 16. Futures traded between $59.26 and $64.15 over the past month.

``We've had an amazingly mild start to the winter,'' said Dale Mohler, senior meteorologist at AccuWeather Inc. in State College, Pennsylvania. ``We are going to see warmer-than-normal weather for a minimum of two more weeks.''

Home-heating demand in the Northeast, the region responsible for 80 percent of U.S. heating-oil use, will be 28 percent below normal through Jan. 3, said Weather Derivatives, a forecaster in Belton, Missouri.

Natural gas for January delivery fell 16.7 cents, or 2.7 percent, to $5.946 per million British thermal units in New York. Futures touched $5.855, the lowest since Oct. 16.

Oil edged higher towards $63 a barrel on Tuesday after Iran warned it could use its oil exports as a weapon following the U.N. Security Council's decision to impose sanctions on its trade in nuclear goods.

U.S. crude gained 19 cents to $62.60 a barrel by 1454 GMT. Brent crude rose 37 cents to $62.79.

Public holidays across Europe meant trading volumes were very thin.

After months of deadlock, the Security Council agreed on Saturday to impose sanctions on Iran's trade in nuclear materials and technology, drawing a warning from Tehran.

"If necessary, Iran will use any weapon to defend itself," Oil Minister Kazem Vaziri-Hamaneh was quoted as saying by the semi-official Fars news agency on Tuesday. In the past he has said Iran would rather not play the oil card.

Iran, the world's fourth-largest crude producer, has condemned the U.N. resolution as illegal and on Sunday vowed to speed up enrichment work, which could heighten tensions.

Oil prices rose earlier in the year in response to fears Iran might cut its oil exports or disrupt Gulf shipping as its row with the West over its nuclear programme escalated. The issue had faded since summer as the U.N. appeared unable to agree on how to deal with Tehran.

Some analysts said traders might disregard the latest developments unless they saw evidence of supply disruption.

"It is certainly a bullish factor, but I think geopolitical matters will be ignored unless clearer risks materialise," said Makoto Takeda, energy analyst at Bansei Securities Co.

OPEC CUTS

Prices also drew support after Abu Dhabi's state oil firm, the main producer in the United Arab Emirates, said it would cut exports of nearly half its crude grades by 3-5 percent in February.

The statement was the first sign the Organization of the Petroleum Exporting Countries intended to comply with a second round of output reductions agreed this month.

The new 500,000 barrels per day cuts are scheduled to take effect in February, giving the producer group time to assess whether peak winter demand will be enough to reduce swollen consumer inventories.

Unusually warm weather in the United States has curbed fuel demand and helped to drag prices just over $1 lower last week.

DTN Meteorlogix said on Monday temperatures in the U.S. Northeast had averaged 10-16 degrees Fahrenheit (5-8 Centigrade) above normal over the long Christmas holiday weekend. But conditions were set to grow colder, nearing normal by Saturday.

Given growing geopolitical risks and the start of a new year, some analysts predicted a new flow of investment-class money could further fuel any rally.

"We expect another influx of financial money into oil in the coming weeks, and geopolitical threats, such as Iran and Nigeria, remain active," said Mike Wittner, head of energy market research at Calyon Corporate and Investment Bank.

Gazprom, the Russian energy monopoly, bought control of the world’s largest combined oil and natural gas development Thursday after a highly publicized campaign of pressure on its foreign operator, Royal Dutch Shell.

Shell’s sale of 50 percent plus one share followed months of accusations against the project by a Russian environmental regulator — a problem that President Vladimir V. Putin, in announcing Gazprom’s entry, said would now most likely be resolved.

Critics of the sale called it the first effective nationalization of a large foreign oil or gas project in Russia, which this year surpassed Saudi Arabia in oil production.

Mr. Putin announced the deal at a Kremlin meeting Thursday evening with executives from Gazprom, Shell and the Japanese trading houses Mitsui and Mitsubishi, which also own part of the project. He made a point of saying Russia remained open to energy investment.

“When speaking about the energy sector, we should admit this is a very liberalized sector of the economy,” Mr. Putin said. “All of the largest world companies are represented in Russia.”

Under the deal, Gazprom will pay $7.45 billion for the controlling share of Sakhalin 2, the vast energy project in Russia’s remote Far East, north of Japan. The project includes offshore platforms, 500 miles of oil and natural gas pipelines, a liquefied natural gas plant and an oil terminal.

The partners have so far sunk about $12 billion into Sakhalin 2, meaning they will recoup about half of their capital investment so far but will be compensated little for the estimated four billion barrels of recoverable reserves at the site.

The price Gazprom paid was “below market rate,” Alex Kormshchikov, an oil and gas analyst at UralSib, said by phone Thursday.

Analysts said the price valued Sakhalin 2 reserves at less than $4 a barrel of oil equivalent, a benchmark in valuing oil and gas deals, compared with an average of $4.90 a barrel at large Russian oil companies like Lukoil or Rosneft.

Still, Shell’s chief executive, Jeroen van der Veer, said he welcomed the stability that an agreement implied, after a turbulent few months when a Russian regulator threatened to halt work on the pipeline, claiming illegal logging and damage to salmon streams.

“I think the great news is that now there is stability so we can all work together, all the shareholders, to get the project up and running as soon as possible,” Mr. van der Veer said at the Kremlin meeting.

Shell reduced its share of Sakhalin 2 to 27.5 percent, from 55 percent; Mitsui to 12.5 percent, from 25 percent; and Mitsubishi to 10 percent, from 20 percent, according to a statement released by Gazprom. Gazprom and Shell also agreed to cooperate on unspecified future projects in Russia.

Russian authorities also backpedaled on their objection to a cost overrun announced by Shell in July 2005, agreeing to approve a doubling in the project cost now that Gazprom is a partner. The agreement was taken as another sign of the increased intertwining of government and business in Russia. About one-third of Russian’s oil and most of its natural gas production is under the control of state companies.

“Regulatory organs in Russia are essentially an arm of Gazprom,” Alex Turkeltaub, managing director of the Frontier Strategy Group, a risk consultancy in Los Angeles, said Thursday in a telephone interview. Mr. Turkeltaub, who has advised companies on political risk in Russia, said other Western oil companies operating multibillion-dollar operations here, like BP and Exxon Mobil, should now expect regulators to extract similar concessions.

At Sakhalin, Gazprom will honor existing contracts for delivery of liquefied natural gas after the project goes into production in 2008, but will control pricing and policies on all future sales, according to the statement.

On Thursday, Gazprom announced second-quarter profit of $5.2 billion, up 123 percent from last year.

The Sakhalin 2 sale came just two years after Russian tax authorities confiscated the largest production unit from Yukos and sold 76.6 percent at a rigged auction to a newly created shell company, Baikal Finance, for $9.4 billion. Yukos executives said the price was far less than true value. That pumping asset, now part of Rosneft, is valued by investors today at more than $60 billion.

Working gas in storage was 3,167 Bcf as of Friday, December 15, 2006, according to EIA estimates. This represents a net decline of 71 Bcf from the previous week. Stocks were 342 Bcf higher than last year at this time and 274 Bcf above the 5-year average of 2,893 Bcf. In the East Region, stocks were 110 Bcf above the 5-year average following net withdrawals of 52 Bcf. Stocks in the Producing Region were 117 Bcf above the 5-year average of 824 Bcf after a net withdrawal of 14 Bcf. Stocks in the West Region were 47 Bcf above the 5-year average after a net drawdown of 5 Bcf. At 3,167 Bcf, total working gas is within the 5-year historical range.

Summary of Weekly Petroleum Data for the Week Ending December 15, 2006

U.S. crude oil refinery inputs averaged over 15.5 million barrels per day during
the week ending December 15, up 232,000 barrels per day from the previous week's
average. Refineries operated at 90.7 percent of their operable capacity last
week. Gasoline production increased last week compared to the previous week,
averaging over 9.3 million barrels per day, while distillate fuel production
also increased, averaging over 4.2 million barrels per day.

U.S. crude oil imports averaged 8.9 million barrels per day last week, down
696,000 barrels per day from the previous week. Over the last four weeks, crude
oil imports have averaged over 9.6 million barrels per day, 470,000 barrels less
than averaged over the same four-week period last year. Total motor gasoline
imports (including both finished gasoline and gasoline blending components) last
week averaged 843,000 barrels per day. Distillate fuel imports averaged 541,000
barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) dropped by 6.3 million barrels compared to the previous week.
However, at 329.1 million barrels, U.S. crude oil inventories remain well above
the upper end of the average range for this time of year. Total motor gasoline
inventories increased by 1.0 million barrels last week, but remain below the
lower end of the average range. Distillate fuel inventories rose by 1.2 million
barrels, and are in the middle of the average range for this time of year.
Increases were seen in both high-sulfur distillate fuel (heating oil)
inventories and diesel fuel inventories (a combination of ultra-low-sulfur and
low-sulfur). Total commercial petroleum inventories fell by 7.9 million barrels
last week, and are just above the upper end of the average range for this time
of year.

Total products supplied over the last four-week period has averaged over 21.1
million barrels per day, or 0.4 percent more than averaged over the same period
last year. Over the last four weeks, motor gasoline demand has averaged over
9.4 million barrels per day, or 2.3 percent above the same period last year.
Distillate fuel demand has averaged nearly 4.3 million barrels per day over the
last four weeks, or 2.0 percent above the same period last year. Jet fuel demand
is down 7.2 percent over the last four weeks compared to the same four-week
period last year.

Oil prices held above $63 on Wednesday ahead of data expected to show a fall in U.S. crude stocks, adding to perception that high inventory levels that hit prices in the third quarter have been reversed.

U.S. crude for February delivery traded at $63.87 a barrel at 1239 GMT, up 72 cents from the January contract expiry of $63.15 on Tuesday. London Brent February crude rose 52 cents to $63.33.

Delays to U.S. oil imports due to dense fog along the Gulf of Mexico coast forced refiners to draw on inventories last week.

U.S. crude stocks were expected to fall 1.7 million barrels in government data due later on Wednesday, according to a Reuters poll of analysts.

The fog disruptions exacerbated an overall tightening inventory picture, analysts said.

U.S. commercial crude and refined product stocks combined were just half a million barrels higher than the same time a year ago last week, a sharp fall from a huge 76 million barrels year-on-year surplus at the end of September.

Crude stocks were still four percent higher than a year ago, but gasoline and distillate stocks were lower.

"I think what we are getting here is a little bit of a delayed reaction to tightening inventories," said Paul Horsnell at Barclays Capital.

"The tightening over the past two months hasn't really been priced fully in yet. Products markets looked horribly slack two months ago, but inventories have been falling by a million barrels per day in the United States."

Other industrialized countries have also seen stocks fall. OECD stocks fell by 40 million dollars in October alone, the International Energy Agency said last week.

"Inventories are still comfortable," said Mike Wittner at investment bank Calyon. "But there is no question at all that we have had a quite serious drawdown in stocks. We're back to square one in terms of where we were a year ago."

Chevron Corp. on Monday said it has completed an expansion of its Pascagoula, Miss., refinery that will boost capacity by roughly 10 percent, or 5.5 million gallons.

The Pascagoula refinery is Chevron's largest wholly owned oil refinery. It processes about 330,000 barrels of crude per day into gasoline and other fuels.

Chevron had shut the plant for about two and half months to complete the expansion of its fluid catalytic cracking unit, which breaks down crude oil.

Chevron shares fell $2.05, or 2.7 percent, to end at $73.33 on the New York Stock Exchange. They have traded between $53.76 and $76.20 over the past year.

Chevron Corp. on Monday said it has completed an expansion of its Pascagoula, Miss., refinery that will boost capacity by roughly 10 percent, or 5.5 million gallons.

The Pascagoula refinery is Chevron's largest wholly owned oil refinery. It processes about 330,000 barrels of crude per day into gasoline and other fuels.

Chevron had shut the plant for about two and half months to complete the expansion of its fluid catalytic cracking unit, which breaks down crude oil.

Chevron shares fell $2.05, or 2.7 percent, to end at $73.33 on the New York Stock Exchange. They have traded between $53.76 and $76.20 over the past year.

Deutsche Bank AG, Germany's largest bank, cuts its forecast for oil prices in the first quarter of 2007 by 5.8 percent because of slower U.S. economic growth.

Crude oil in New York may average $66 a barrel in the first quarter, down from a previous forecast of $70, the bank's Chief Energy Economist Adam Sieminski said in a Dec. 15 report. Prices may rebound later in the year, Deutsche said, keeping its forecast for average prices in 2007 unchanged at $62 a barrel.

Economic growth in the U.S., the world's largest energy consumer, may slow next year because of lower consumer spending and rising unemployment, Deutsche said. That will cut demand for auto fuels as motorists make fewer journeys. A warmer-than-usual winter in the U.S. may also cut demand for heating fuel made from crude oil, the report said.

``We are lowering our first quarter 2007 forecast in response to the slowdown in the U.S. economy and possibly milder winter than normal,'' Sieminksi said in the report titled: ``Oil Market Outlook: It's the Economy.''

West Texas Intermediate oil, or WTI, will average $65 a barrel in New York in the first quarter of 2007, according to the median forecast of 19 oil analysts surveyed by Bloomberg, including Sieminski.

Crude oil in New York rose 2.3 percent last week to a two- week high of $63.43 a barrel after the Organization of Petroleum Exporting Countries agreed to cut oil production for the second time in three months.

Norway's two main oil companies, Statoil ASA and Norsk Hydro ASA, presented separate plans on Friday for developing new oil and natural gas fields in adjacent areas of the northern North Sea.

State-controlled Statoil called its Gjoea field project a major new North Sea development, while Norsk Hydro said its smaller Vega and Vega Soer fields had been made economically viable by new technology and the option of linking production to Statoil's new field.

"The development of the Gjoea field is a major field project, and establishing that infrastructure offers a good basis for developing additional resources in the area," said Oil Minister Odd Roger Enoksen in accepting the project proposals. "The project shows that the Norwegian continental shelf still has a lot to offer."

The government has been encouraging oil companies to develop new fields and smaller finds in the North Sea to keep up crude flows that make the Nordic country the world's third-largest oil exporter, after Saudi Arabia and Russia.

Statoil said the Gjoea field, being developed at an estimated cost of 27 billion kroner (US$4.35 billion; euro3.31 billion) will have a daily production of 17 million cubic meters (953 million cubic feet) of natural gas plus about 14,000 cubic meters (88,000 barrels) of oil and condensate after coming on stream in 2010.

The company said it wants to develop the field, about 80 kilometers (50 miles) off the midwestern Norway coast, with subsea wells, linked to a semi-submersible oil platform. The gas will be sent through an existing pipeline to St. Fergus, Scotland.

Norsk Hydro said its Vega fields, expected to cost 6 billion kroner (US$975 million; euro736 million) to develop, will produce about 7 million cubic meters (247 million cubic feet) and 25,000 barrels of condensate per day. The production will be sent north to Statoil's Gjoea field by pipeline, for processing and export.

Enoksen said the review and approval process by the government and parliament was expected to be completed by mid-2007.

Working gas in storage was 3,238 Bcf as of Friday, December 8, 2006, according to EIA estimates. This represents a net decline of 168 Bcf from the previous week. Stocks were 245 Bcf higher than last year at this time and 225 Bcf above the 5-year average of 3,013 Bcf. In the East Region, stocks were 84 Bcf above the 5-year average following net withdrawals of 93 Bcf. Stocks in the Producing Region were 101 Bcf above the 5-year average of 854 Bcf after a net withdrawal of 55 Bcf. Stocks in the West Region were 40 Bcf above the 5-year average after a net drawdown of 20 Bcf. At 3,238 Bcf, total working gas is above the 5-year historical range.

Summary of Weekly Petroleum Data for the Week Ending December 8, 2006

U.S. crude oil refinery inputs averaged 15.3 million barrels per day during the
week ending December 8, down 169,000 barrels per day from the previous week's
average.  Refineries operated at 89.1 percent of their operable capacity last
week.  However, gasoline production increased last week compared to the previous
week, averaging nearly 9.3 million barrels per day, while distillate fuel
production declined, averaging over 4.0 million barrels per day.

U.S. crude oil imports averaged 9.6 million barrels per day last week, down
701,000 barrels per day from the previous week. Over the last four weeks, crude
oil imports have averaged over 10.0 million barrels per day, 132,000 barrels
less than averaged over the same four-week period last year.  Total motor
gasoline imports (including both finished gasoline and gasoline blending
components) last week averaged 967,000 barrels per day. Distillate fuel imports
averaged 465,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) dropped by 4.3 million barrels compared to the previous week.
However, at 335.4 million barrels, U.S. crude oil inventories remain well above
the upper end of the average range for this time of year.  Total motor gasoline
inventories inched lower by 0.1 million barrels last week, and are below the
lower end of the average range.  Distillate fuel inventories declined by 0.5
million barrels, and are in the lower half of the average range for this time of
year.  A decline in high-sulfur distillate fuel (heating oil) inventories more
than compensated for a slight rise in diesel fuel inventories (a combination of
ultra-low-sulfur and low-sulfur).  Total commercial petroleum inventories fell
by 7.5 million barrels last week, and are just above the upper end of the
average range for this time of year.

Total products supplied over the last four-week period has averaged 21.0 million
barrels per day, or 0.7 percent more than averaged over the same period last
year.  Over the last four weeks, motor gasoline demand has averaged over 9.3
million barrels per day, or 1.9 percent above the same period last year.
Distillate fuel demand has averaged nearly 4.3 million barrels per day over the
last four weeks, or 3.0 percent above the same period last year. Jet fuel demand
is down 6.5 percent over the last four weeks compared to the same four-week
period last year.

Russian gas behemoth OAO Gazprom is close to a deal with Royal Dutch Shell PLC on the terms for Gazprom's entry into the Sakhalin-2 oil and gas project, the company's chairman said Tuesday.

Regulators have stepped up scrutiny of the project -- the largest single foreign investment in Russia -- in a campaign that is widely seen as part of Kremlin efforts to tighten its grip on Russia's vast oil and gas assets.

On Friday, Shell made a number of proposals to Gazprom, which analysts said could herald a deal putting the gas giant in control of the project, on the Pacific island of Sakhalin.

Dmitry Medvedev, who serves simultaneously as Gazprom chairman and deputy prime minister, told reporters on Tuesday that the company could be satisfied with less than a 50 percent stake in Sakhalin-2.

"The size of the stake is an important question but not a critical one," Medvedev said.

Signaling that difficult talks were still under way, Industry and Energy Minister Viktor Khristenko said later Tuesday it was "too early" to talk about an agreement between Shell and Gazprom.

Sakhalin-2 -- whose shareholders also include Japan's Mitsui and Mitsubishi -- is currently producing crude oil and plans to begin exporting liquefied natural gas in mid-2008.

It also is the only major oil and gas project under development in Russia that does not have a Russian shareholder -- a fact, observers say, that has left it vulnerable to pressure from the Kremlin.

Shell enraged the Kremlin last year when it announced that the cost of the project would double to US$22 billion (euro17 billion): Under the terms of the so-called production sharing agreements signed in the 1990s, the Russian government sees revenues from the Sakhalin-2 project only when its costs have been covered.

Khristenko reaffirmed Tuesday that the government wouldn't accept a doubling of the project's costs. He said at a news conference that the Cabinet would like to see the project's budget approved in the first quarter of next year.

Earlier Tuesday, Oleg Mitvol, of the state environmental watchdog Rosprirodnadzor, said Sakhalin-2 had caused environmental damages worth US$10 billion (euro7.6 billion), news agencies reported.

He said a final evaluation of the damages would be completed by fall next year and that he planned to sue the company in Russia and in the Arbitration Institute of the Stockholm Chamber of Commerce, which settles such disputes.

"I think we will be ready to start the court process by the start of March," Mitvol was quoted as saying by the RIA-Novosti agency.

Mitvol and other Russian officials say that a Shell-led consortium developing the giant energy project on the Pacific island of Sakhalin has silted rivers and felled trees illegally.

Representatives for the consortium, Sakhalin Energy, were not immediately available to comment.

Mitvol also said he planned to begin an inspection of the Sakhalin-1 project, which is 30 percent-owned by Exxon Mobil Corp.

Oil and gas producer Devon Energy Corp. on Monday said Chief Financial Officer Brian J. Jennings will step down.

Jennings, 46, spent seven years with the company and is leaving "to pursue other interests," Devon said.

Danny Heatly, vice president of accounting, will continue to fulfill the responsibilities of principal accounting officer.

In November, Devon posted a 5 percent drop in third-quarter earnings due to lower natural gas prices and increased operating costs.

Oil climbed above $63 on Friday after OPEC's president said he favored another production cut when the group meets next week.

U.S. crude rose $1.04 at $63.53 a barrel at 1350 GMT. London Brent crude traded $1.21 higher at $63.78.

OPEC President Edmund Daukoru said he wanted the group to trim output when it meets on Thursday, deepening a 1.2 million barrel per day cut agreed upon in October.

"I favor a cut," Daukoru told reporters in Abuja. "The market is still soft ... I'm not comfortable."

"We hope that if we moderate supply a bit, if we don't flood the market, some mop up will take place as winter really kicks in," he added.

Daukoru, who is also Nigeria's energy minister, said crude prices at $63 a barrel were still too cheap. Prices have rebounded more than 15 percent since tumbling to a 17-month low of $54.86 in mid-November.

A senior OPEC delegate earlier on Friday told Reuters that there was a "strong possibility" the group would trim output further to bring down high global inventories.

"Everybody knows that stock levels are higher than they should be," he said

U.S. crude stocks were near their highest since 1991 for this time of year.

Ken Hasegawa, a manager at Japan's Himawari CX, said OPEC needed to cut at least 500,000 barrels per day to maintain the current price level.

"I think OPEC will cut production to support prices till the second quarter of 2007. The supply side is too strong right now," he said.

The market also found support from a sharp fall in the Brent loading schedule for January.

The Shell-operated Brent crude oil stream was scheduled to load 139,000 barrels per day in January, down nearly half from the previous month's 268,000 bpd.

Traders attributed the decline to poor production and demand for January cargoes.

"At year-end, most participants wish to load within December 2006 instead of forwarding it into January," one trader said.

Working gas in storage was 3,406 Bcf as of Friday, December 1, 2006, according to EIA estimates. This represents a net decline of 11 Bcf from the previous week. Stocks were 232 Bcf higher than last year at this time and 282 Bcf above the 5-year average of 3,124 Bcf. In the East Region, stocks were 109 Bcf above the 5-year average following net injections of 10 Bcf. Stocks in the Producing Region were 129 Bcf above the 5-year average of 881 Bcf after no net change in stock levels. Stocks in the West Region were 45 Bcf above the 5-year average after a net drawdown of 21 Bcf. At 3,406 Bcf, total working gas is above the 5-year historical range.

Oil prices gained slightly in Asian trading Thursday after U.S. government data showed that domestic inventories of crude oil, gasoline and heating oil fell last week.

Light, sweet crude for January delivery rose 23 cents (U.S.) to $62.42 a barrel in Asian electronic trading on the New York Mercantile Exchange. The contract on Wednesday fell 24 cents to settle at $62.19 a barrel.

January Brent crude at London's ICE Futures exchange rose 32 cents to $63.39 a barrel.

In its latest petroleum supply report released Wednesday, the Energy Information Administration, the U.S. Department of Energy's statistical arm, said domestic inventories of crude oil fell by 1.1 million barrels last week to 339.7 million barrels, or 5.4 per cent above year-ago levels.

Gasoline stocks declined by 1.1 million barrels to 200 million barrels, or 2.6 per cent less than a year ago.

Inventories of distillate fuel, which include heating oil and diesel, shrank by 400,000 barrels to 132.4 million barrels, or 1 per cent below year-ago levels.

The decline in inventories came as refinery utilization rose 2.4 percentage points to 90.5 per cent of operating capacity.

Analysts surveyed by Dow Jones Newswires had predicted a build of less than 1 million barrels in both gasoline and crude stocks, and a modest drawdown in distillate stocks.

Also supporting prices was uncertainty ahead of a meeting next week of oil ministers from the Organization of Petroleum Exporting Countries. OPEC officials have been pressing in recent days for a cut in output on top of a production cut of 1.2 million barrels a day, approved in October.

Weighing on energy prices were expectations of milder temperatures in the United States. Temperatures in the Northeast, the nation's largest heating oil market, were expected to moderate later in the week, with the National Weather Service forecasting above-normal temperatures through most of the nation next week.

Heating oil futures rose half a cent to $1.7990 a gallon while natural gas prices added 3.8 cents to $7.765 per 1,000 cubic feet.

Oil prices were steady Wednesday after U.S. government data showed domestic inventories of crude oil, gasoline and heating oil fell last week.

The possibility of more production cuts by the Organization of Petroleum Exporting Countries has also kept a floor under prices. OPEC, which meets Dec. 14 in Nigeria, says it is concerned about ballooning worldwide crude oil inventories.

Light, sweet crude for January delivery rose 2 cents to $62.45 a barrel on the New York Mercantile Exchange. The contract had fallen a penny Tuesday.

January Brent crude at London's ICE Futures exchange fell 19 cents to $63.13 a barrel.

In its latest petroleum supply report, the Department of Energy said domestic inventories of crude oil fell by 1.1 million barrels last week to 339.7 million barrels, or 5.4 percent above year ago levels.

Inventories of gasoline declined by 1.1 million barrels to 200 million barrels, or 2.6 percent less than a year ago. Inventories of distillate fuel, which include heating oil and diesel, shrank by 400,000 barrels to 132.4 million barrels, or 1 percent below year ago levels.

Heating oil fell half a cent to $1.7933 a gallon, unleaded gasoline futures fell 1.2 cent to $1.63 a gallon and natural gas futures fell 9.7 cents to $7.588 per 1,000 cubic feet.

The U.S. Energy Department said Tuesday in its annual long-term world energy forecast that the price of oil, when adjusted for inflation, would decline between 2007 and 2015 as investments made in recent years of historically high prices bring new supplies to the market.

Summary of Weekly Petroleum Data for the Week Ending December 1, 2006

U.S. crude oil refinery inputs averaged nearly 15.5 million barrels per day
during the week ending December 1, up 319,000 barrels per day from the previous
week's average. Refineries operated at 90.5 percent of their operable capacity
last week. Gasoline production increased last week compared to the previous
week, averaging nearly 9.2 million barrels per day, while distillate fuel
production also increased, averaging nearly 4.2 million barrels per day.

U.S. crude oil imports averaged 10.3 million barrels per day last week, up
541,000 barrels per day from the previous week. Over the last four weeks, crude
oil imports have averaged 10.0 million barrels per day, 229,000 less than
averaged over the same four-week period last year. Total motor gasoline imports
(including both finished gasoline and gasoline blending components) last week
averaged 877,000 barrels per day. Distillate fuel imports averaged 303,000
barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) declined by 1.1 million barrels compared to the previous
week. At 339.7 million barrels, U.S. crude oil inventories remain well above
the upper end of the average range for this time of year. Total motor gasoline
inventories dropped by 1.1 million barrels last week, and are below the lower
end of the average range. Distillate fuel inventories inched lower by 0.4
million barrels, and are near the middle of the average range for this time of
year. A decline in high-sulfur distillate fuel (heating oil) inventories more
than compensated for a slight rise in diesel fuel inventories (a combination of
ultra-low-sulfur and low-sulfur). Total commercial petroleum inventories fell
by 4.2 million barrels last week, and are just above the upper end of the
average range for this time of year.

Total products supplied over the last four-week period has averaged nearly 21.0
million barrels per day, or 1.7 percent more than averaged over the same period
last year. Over the last four weeks, motor gasoline demand has averaged nearly
9.3 million barrels per day, or 1.6 percent above the same period last year.
Distillate fuel demand has averaged over 4.3 million barrels per day over the
last four weeks, or 6.6 percent above the same period last year. Jet fuel demand
is down 0.6 percent over the last four weeks compared to the same four-week
period last year.

Oil eased below $63 on Wednesday ahead of U.S. data expected to show crude inventories in the world's biggest consumer remain very high, although a cold snap has slightly reduced stocks of heating fuel.

U.S. crude was trading six cents lower at $62.37 a barrel at 1120 GMT. European benchmark Brent crude edged two cents higher to $63.34.

Analysts expect U.S. government data to be published 1530 GMT will show a 500,000-barrel decline in distillate stocks, which include heating oil.

But crude stocks were predicted to rise by 200,000 barrels, keeping them near their highest level for the time of year since 1991.

A major snow-storm increased demand for heating oil in the United States, but weather forecasters have predicted a return to mild temperatures this weekend and that they could last for two weeks.

Many analysts and traders say prices could struggle to sustain the gains that last week pulled the market out of a two-month trading range of roughly $56-$62 a barrel, although the prospect of a further output cut by the Organization of the Petroleum Exporting Countries (OPEC) is providing some support.

OPEC agreed in October to reduce supplies by 1.2 million barrels per day November 1 and most OPEC ministers have said they see the need for another cut when they meet in Abuja on December 14.

"There has been a temporary rebound on a combination of OPEC's intervention in the market and a seasonal increase in demand," said Eoin O'Callghan of BNP Paribas.

But he said high inventory levels and the threat of economic weakness in the United States were among the factors that could erode gains.

Royal Dutch Shell was upgraded to buy from hold at ABN Amro, with the broker arguing it would fit with an investor looking to get share price exposure to a possible mega-merger. "We estimate the probability-weighted value of merger scenarios to be highest in its case, at up to 8% of the group's current market capitalization on the basis of cost savings and up to 18% if we include all potential sources of value creation from a merger," the broker said.

Oil prices retreated Friday despite a greater likelihood that OPEC will again reduce output to boost prices when it meets later this month.

Edmund Daukoru, who is Nigeria's oil minister and president of the 11-member Organization of Petroleum Exporting Countries, said the group is likely to trim production again and he expects a cut of at least 500,000 barrels a day.

That echoed comments Thursday from Venezuelan oil minister Rafael Ramirez, who said OPEC could cut production by half a million barrels a day when it meets Dec. 14 in Abuja.

"There is likely to be some further trimming, the actual amount will depend on the circumstances," said Daukoru. While the specific amount will be decided at the OPEC meeting based on data and trends, "I don't expect anything less" than 500,000 barrels per day to be cut, he said.

Light sweet crude for January delivery was down 74 cents to $62.39 a barrel on the New York Mercantile Exchange by afternoon in Europe. Brent crude was down 77 cents at $63.49 on London's ICE Futures exchange.

Prices had jumped to two-month highs Thursday on news of declining U.S. fuel inventories and the approach of the Northern Hemisphere winter, when heating fuel demand rises. In addition, Vienna's PVM Oil Associates said "increased trading activity on the expiry day of the December contract may have also contributed to rising prices."

Venezuelan President Hugo Chavez said Thursday that OPEC members had reached a consensus to keep oil prices at $50 a barrel. The weekly average for the OPEC basket price this week currently stands above $56 a barrel.

Traders said Chavez's comment suggested that the 11-member group was not seeking a significant increase in crude oil prices. Others said they expected the market to regain an upward momentum, prompted in part by the approach of the Northern Hemisphere winter and declining U.S. stocks.

"Prices will rise again soon given lower U.S. oil stocks and with funds coming back to the market," said Ken Hasegawa, a broker with Himawari CX in Tokyo.

Heating oil futures for January delivery fell by 2 cents to $1.8300 per gallon, while unleaded gasoline futures dropped more than a cent to $1.6560 a gallon. At the end of the year the unleaded gasoline futures contract will be replaced by another as a result of changing environmental regulations.

Natural gas fell nearly 17 cents to $8.675 per 1,000 cubic feet.

The Energy Department said natural-gas inventories fell 32 billion cubic feet for the week ended Nov. 24. Global Insight expected a decline of 18 billion. Total stocks now stand at 3.417 trillion cubic feet, up 185 billion cubic feet from the year-ago level, and 230 billion cubic feet above the five-year average, the government data said. January natural gas rose 12.9 cents to $8.99 per million British thermal units after reaching an over two-month high of $9.05 before pulling back to $8.86 in mid-day trading.

Working gas in storage was 3,417 Bcf as of Friday, November 24, 2006, according to EIA estimates. This represents a net decline of 32 Bcf from the previous week. Stocks were 185 Bcf higher than last year at this time and 230 Bcf above the 5-year average of 3,187 Bcf. In the East Region, stocks were 62 Bcf above the 5-year average following net withdrawals of 28 Bcf. Stocks in the Producing Region were 113 Bcf above the 5-year average of 897 Bcf after a net withdrawal of 5 Bcf. Stocks in the West Region were 55 Bcf above the 5-year average after a net addition of 1 Bcf. At 3,417 Bcf, total working gas is above the 5-year historical range.

Oil prices climbed by nearly $1 a barrel Wednesday after U.S. government data showed shrinking supplies of crude, gasoline and heating oil.

The arrival of colder weather in the U.S. has also helped to lift energy prices this week. Other factors contributing to the market's upward momentum include a decline in the U.S. dollar, the currency in which crude oil is traded, and the possibility of further production cuts by OPEC, which meets next month in Nigeria.

Light sweet crude for January delivery rose 96 cents to $61.95 a barrel on the New York Mercantile Exchange. January Brent crude at London's ICE Futures exchange rose 40 cents to $61.61 a barrel.

In other Nymex trading, natural gas futures climbed 10 cents to $8.66 per 1,000 cubic feet, heating oil futures gained 1.87 cent to $1.747 per gallon on the Nymex and gasoline futures climbed 4.29 cents to $1.68 a gallon.

The latest report from the U.S. Energy Department showed crude-oil inventories shrinking by 300,000 barrels last week to 340.8 million barrels, or 6 percent more than a year ago. Gasoline inventories declined by 600,000 barrels to 201.1 million barrels, or almost 2 percent below year ago levels. The supply of distillate, which includes heating oil and diesel, fell by 1 million barrels to 132.8 million barrels, or 1 percent above year ago levels.

Oil prices are down more than 20 percent since hitting an a high above $78 a barrel in mid-July. They haven't settled above $62 a barrel since Oct. 1.

OPEC announced in mid-October that it would reduce output by 1.2 million barrels a day, but skepticism persists about the cartel's commitment to carrying out the cuts.

Oil prices rose toward $61 a barrel Tuesday on concerns about winter weather, a December OPEC meeting and violence in Iraq.

Accuweather.com is calling for wintry U.S. weather in the West to gradually move to the East. On Monday, oil prices were lifted by more than $1 a barrel after an attack on an Iraqi oil facility and comments from Saudi Arabia's oil minister suggesting further production cuts by the Organization of Petroleum Exporting Countries, which meets in Nigeria next month.

Light, sweet crude for January delivery rose 60 cents to $60.92 a barrel on the New York Mercantile Exchange. January Brent crude at London's ICE Futures exchange rose 58 cents to $61.02 a barrel.

Nymex heating oil futures gained 1.12 cent to $1.7164 per gallon, unleaded gasoline fell less than a penny to $1.59 a gallon and natural gas futures rose 21.1 cents to $8.209 per 1,000 cubic feet.

Natural gas futures reversed three days of losses Monday on forecasts calling for colder weather across the U.S. over the next two weeks.

London-based newspaper Al-Hayat reported Monday that Saudi Oil Minister Ali al-Naimi had indicated that OPEC would evaluate the effect of October's decision to cut output when it meets next month in Abuja, Nigeria, and if necessary authorize another cut.

"We think that as the meeting's date closes in, the cartel will close ranks and coalesce around a position of supporting a cut," said Edward Meir at Man Financial. "If members leave the meeting without cutting, prices could sink even further."

Oil prices have fallen by about 23 percent since hitting an all-time trading high above $78 a barrel in mid-July. They haven't settled above $62 a barrel since Oct. 1, despite the OPEC's announcement in mid-October that it would reduce output by 1.2 million barrels a day.

Skepticism that OPEC members are committed to production cuts, as well as milder-than-normal U.S. temperatures this fall, have moderated prices.

Oil prices rose Monday after an attack on an oil facility in Iraq and after Saudi Arabia's oil minister said OPEC might decide to cut output again when it meets next month.

Light sweet crude for January delivery rose 71 cents to $59.94 a barrel on the New York Mercantile Exchange. Brent crude was up 27 cents to $60.30 per barrel on the ICE Futures Exchange in London.

A mortar attack started a huge fire Monday night at an oil facility near Kirkuk in Iraq, shutting the flow of crude oil to a major refinery. While the markets responded with a small rally, the effect of the news was minimal, according to Alaron Trading Corp. analyst Phil Flynn.

“The market already seems to have built in a premium for Iraq. Any drop of oil out of Iraq is considered gravy,” Flynn said. “The markets are still stuck in a big trading range of $55 a barrel on the downside and just above $62 on the upside pretty much since October.”

Oil prices have fallen by about 23 percent since hitting an all-time trading high above $78 a barrel in mid-July. They haven't settled above $62 a barrel since Oct. 1, despite the Organization of Petroleum Exporting Countries' announcement in mid-October that it would reduce output by 1.2 million barrels a day.

Skepticism that OPEC members are committed to production cuts, as well as milder-than-normal U.S. temperatures this fall, have moderated prices.

London-based newspaper Al-Hayat said Saudi oil minister Ali al-Naimi had indicated the organization would evaluate the effect of October's decision when it meets next month in Abuja, and if necessary authorize another cut.

In other Nymex trading, heating oil gained 3.6 cents to $1.7025 per gallon, unleaded gasoline rose 1.12 cent to $1.6050 a gallon and natural gas rose 25.2 cents to $7.970 per 1,000 cubic feet.

Crude oil in New York rose above $60 a barrel on Monday on signs OPEC may cut production for the second time in two months as peak U.S. winter demand approaches.

The Organization of Petroleum Exporting Countries may trim output next month if November's 1.2 million barrel-a-day cut fails to ``stabilize'' prices, London-based Al-Hayat reported yesterday, citing Saudi Arabia's Oil Minister Ali al-Naimi. Gold, copper and corn gained as a slide in the U.S. dollar made commodities cheaper for consumers outside the U.S.

``OPEC has to cut production to sustain the prices,'' said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures Ltd. in Tokyo. ``The crude oil price is tracking the metals and even the grain markets.''

Crude oil for January delivery climbed as much as 96 cents, or 1.6 percent, to $60.20 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It traded at $60.18 a barrel at 2:24 p.m. in Singapore.

The contract last settled at $59.24 on Nov. 22, before floor trading shut for Thanksgivings Day on Nov. 23 for two days In after-hours electronic trading since Nov. 22, prices ranged between $58.66 and $60.17.

OPEC, which produces about 40 percent of the world's oil, agreed last month to cut output, citing slowing demand growth and rising stockpiles. The group will discuss supplies at a Dec. 14 meeting in Abuja, Nigeria.

In London, Brent crude oil for January settlement rose as much as 40 cents, or 0.7 percent, to $60.43 a barrel in electronic trading on the ICE Futures Exchange at 2:16 p.m. Singapore time.

Mild weather this winter has trimmed demand and contributed to ``very high'' global inventories, Qatar's Oil Minister Abdullah bin Hamad al-Attiyah said in New Delhi on Nov. 24.

The U.S. is the world's biggest oil consumer. Supplies there jumped to 341.1 million barrels on Nov. 17, 14 percent above the five-year average for the period, the U.S. Energy Department said last week.

Temperatures in the nation's Northeast, the biggest heating oil consuming region, will be above normal this week, forecaster Meteorlogix LLC said yesterday. Heating demand in New York City will be 36 percent below average.

``We're feeling more and more range-bound,'' said Tobin Gorey, commodity analyst at Commonwealth Bank of Australia Ltd. in Sydney. ``The key thing this time of year is demand from cold weather, and it just hasn't been cold.''

January oil futures have traded between $57.80 and $63.21 so far this month. Sustained weakness in the U.S. dollar should lift the lower end of that range going into the OPEC meeting, Gorey said.

Crude-oil prices rose above $60 a barrel Friday after an attack Wednesday on a facility in Nigeria and Qatar's oil minister said OPEC may consider oil production cuts at its next meeting.

In midafternoon trading in New York, light sweet crude for January delivery rose 94 cents to $60.12 a barrel in electronic trading on the New York Mercantile Exchange.

Brent crude rose 75 cents to $60.10 on the ICE Futures exchange in London.

In other Nymex trading, heating oil was up 2.68 cents to $1.7050 per gallon, unleaded gasoline rose 1.43 cent to $1.5945, and natural gas rose 19 cents to $7.93 per 1,000 cubic feet.

Seven foreign oil workers were taken hostage Wednesday from an Italian oil ship off Nigeria's southern coast, the latest in a string of hostage takings and attacks on Nigeria's oil industry which have cut production by 25 percent since the beginning of the year. A British man was killed along with two kidnappers and a soldier as the other six hostages were freed by the Nigerian Navy, according to the Italian oil company involved, Eni SpA.

Qatar's oil minister said Friday that the Organization of Petroleum Exporting Countries may consider cutting oil output at its next meeting in Abuja, Nigeria, on Dec. 14, Dow Jones Newswires reported.

Oil prices were still adjusting to Wednesday's weekly U.S. petroleum report that said crude-oil inventories swelled by 5.1 million barrels last week to 341.1 million barrels, or 6 percent above year-ago levels.

The nation's gasoline stocks grew by 1.4 million barrels to 201.7 million barrels after a drop in refinery activity, leaving them less than 1 percent below year-ago levels. The supply of distillate fuel, which includes heating oil and diesel, is slightly above year-ago levels even after a 1.2 million barrel decline that left inventories at 133.8 million barrels.

A separate report by the agency showed the nation's inventory of natural gas declining by 1 billion cubic feet, but at 3.45 trillion cubic feet, the amount of fuel in underground storage is still 7.5 percent above year-ago levels.

Oil prices have fallen by about 23 percent since hitting an all-time trading high above $78 a barrel in mid-July. They haven't settled above $62 a barrel since Oct. 1, despite the OPEC's announcement in mid-October that it would reduce output by 1.2 million barrels a day.

Skepticism that OPEC members are committing to production cuts, as well as milder-than-normal U.S. temperatures this fall, have moderated prices.

Oil edged lower on Friday to about $59 a barrel after tumbling on a build in crude stocks, but trade was muted by a US holiday.

London Brent crude shed 7 cents to $59,28 a barrel in early trade after falling by 14 cents a day ago. US crude was trading at $59,07 a barrel, just below Wednesday’s close. The New York Mercantile Exchange was shut for the two-day Thanksgiving holiday, with electronic Global trade continuing but liquidity thin.

Prices dropped by about $1 on Wednesday due to a 5,1-million-barrel rise in US crude stocks, but may be drawing support from Iran’s dispute with the West after the United Nations (UN) nuclear watchdog blocked Tehran’s bid for technical aid on reactor project.

“The concerns over tensions between Iran and the West flaring again, has resurfaced, this should give upward pressure to prices,” said Dariusz Kowalczyk, senior investment strategist at CFC Securities in Hong Kong.

On Thursday, the International Atomic Energy Agency’s board indefinitely denied Iran’s request for technical aid for the Arak reactor project it believes could be secretly used to yield bomb-grade plutonium.

Iran however insists that its nuclear agenda is limited to generating electricity or as in the case of the Arak project, radio-isotopes for medical purposes. The US and European allies suspect the Islamic Republic’s nuclear programme is a cover for building a bomb, and have drafted UN sanctions against Tehran.

On Thursday Qatar oil minister dulled down hawkish comments made last week on the Organisation of the Petroleum Exporting Countries (Opec) production cuts.

“It’s too early now to jump to the front seat and say what we will do, what is the quantity if we want to cut, Abdullah bin Hamad al-Attiyah told reporters in Seoul. Last week Attiyah said Opec had “no choice but to accept a cut” when it meets in Nigeria next month, and that a $60 US crude oil price was “moderate”.

Prices over the past few weeks have dipped below $55 a barrel, before rebounding to about $60 despite bulging US inventories and continued warm winter in the US suppressing demand.

“We have conflicting fundamental signals in the market...That’s why we are still dancing around $60,” Kowalczyk said.

Summary of Weekly Petroleum Data for the Week Ending November 17, 2006

U.S. crude oil refinery inputs averaged 15.0 million barrels per day during the
week ending November 17, up 60,000 barrels per day from the previous week's
average. Refineries operated at 87.1 percent of their operable capacity last
week. Gasoline production inched slightly higher last week compared to the
previous week, averaging 8.7 million barrels per day, while distillate fuel
production increased as well, averaging nearly 4.1 million barrels per day.

U.S. crude oil imports averaged 10.5 million barrels per day last week, up over
1.0 million barrels per day from the previous week. Over the last four weeks,
crude oil imports have averaged nearly 10.0 million barrels per day. Total
motor gasoline imports (including both finished gasoline and gasoline blending
components) last week averaged 1.2 million barrels per day. Distillate fuel
imports averaged 205,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) jumped by 5.1 million barrels compared to the previous week.
At 341.1 million barrels, U.S. crude oil inventories remain well above the upper
end of the average range for this time of year. Total motor gasoline
inventories increased by 1.4 million barrels last week, but remain in the lower
half of the average range. Distillate fuel inventories fell by 1.2 million
barrels, but remain in the upper half of the average range for this time of
year. A decline in ultra-low-sulfur diesel fuel inventories more than
compensated for a slight increase in low-sulfur diesel fuel (15 ppm to 500 ppm
sulfur), while high-sulfur distillate fuel (heating oil) inventories inched
slightly lower. Total commercial petroleum inventories rose by 3.8 million
barrels last week, and remain above the upper end of the average range for this
time of year.

Total products supplied over the last four-week period has averaged nearly 21.1
million barrels per day, or 2.9 percent more than averaged over the same period
last year. Over the last four weeks, motor gasoline demand has averaged nearly
9.3 million barrels per day, or 1.9 percent above the same period last year.
Distillate fuel demand has averaged over 4.4 million barrels per day over the
last four weeks, or 9.2 percent above the same period last year. Jet fuel demand
is down 0.1 percent over the last four weeks compared to the same four-week
period last year.

US Petroleum Inventory Data will be released at 10:30 AM Eastern Time.

Analysts are expecting the weekly report to show that U.S. supply of gasoline and distillates, which include heating oil and diesel fuel, dropped for the seventh straight week.

"Day-to-day events and commentary will continue to push prices up and down in the short term, but until something new of significant fundamental import surfaces, prices will most likely remain fairly close to the current range," said John Kilduff at Fimat USA.

Light sweet crude for January delivery fell 23 cents to $59.94 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. On London's ICE Futures exchange, January Brent was down 26 cents to $60.13 a barrel.

Meanwhile Wednesday, gunmen in Nigeria seized seven hostages from an Italian oil supply vessel off the southern coast. Two private security contractors confirmed the overnight incident on a vessel belonging to Agip, a subsidiary of Italian oil giant Eni SpA.

The kidnappings were the latest in a series of attacks on oil installations in the volatile Niger Delta, where most of Nigeria's oil is produced. Each attack raises market concern about how the violence may affect the oil supply.

Oil rose above $60 on Tuesday following news that the Trans-Alaska Pipeline was flowing at just 25 percent of its normal 800,000 barrel-a-day capacity, as strong winds disrupted tanker loading. Also, traders worried about shutdowns at Exxon Mobil Corp.'s refinery in Baytown, Texas, America's biggest at 562,500 barrels a day, and Citgo's 156,000 barrel-a-day refinery in Corpus Christie, Texas.

Oil prices have fallen by about 23 percent since hitting an all-time trading high above $78 a barrel in mid-July. They haven't settled above $62 a barrel since Oct. 1, despite the Organization of Petroleum Exporting Countries' announcement in mid-October that it would reduce output by 1.2 million barrels a day.

Skepticism that OPEC members are committing to production cuts, as well as milder-than-normal U.S. temperatures this fall, have moderated prices.

In other Nymex trading, heating oil futures dropped 1.35 cent to $1.7196 a gallon, unleaded gasoline was down 1.82 cents at $1.6145 and natural gas futures fell 1.9 cents to $7.969 per 1,000 cubic feet.

Oil production at the Syncrude Canada Ltd. oil sands project will be cut by 85,000 to 100,000 barrels a day until Nov. 27 while part of its upgrading-refinery complex is repaired, the Syncrude joint-venture's largest shareholder said.

Canadian Oil Sands Trust, which holds a 35.5 percent stake in Syncrude, Canada's largest oil-sands producer, said minor repairs will have to be made at its Coker 8-2 after a leak in an overhead line was spotted on Saturday.

The trust said production will continue from the project's two other cokers, part of the upgrading refinery that converts bitumen mined from the sands of Northern Alberta into synthetic crude oil.

After Nov. 27 production is expected to return to the project's normal output of nearly 350,000 barrels a day

Shares of several major oil companies declined in Monday premarket trading amid a rise in gas prices as Americans kick off the holiday season.

In premarket electronic trading, BP PLC shed 48 cents to $65.90 after closing at $66.38 Friday, and ConocoPhillips shed 60 cents to $62.10, from their Friday close at $62.70. Both stocks trade on the New York Stock Exchange.

Gas prices have risen about 5 cents per gallon nationwide from two weeks ago, industry analyst Trilby Lundberg said.

On Nov. 17, the national average for self-serve regular was $2.23, according to Lundberg's latest survey of 7,000 gas stations across the country. The national average for mid-grade was $2.34, while premium was $2.44 per gallon.

Looking ahead, Goldman Sachs analyst Kelvin Koh expects crude oil fundamentals to strengthen, not weaken.

"We believe the fundamentals of the U.S. mid-continent are beginning to tighten," Koh wrote in a client note.

Koh said a build in below-normal U.S. crude oil inventory has helped support U.S. Gulf coast crude oil prices as refinery maintenance typically lowers crude oil demand.

Shares of Exxon-Mobil Corp. were unchanged from their Big Board close at $73.08 in the early session, which Chevron Corp. shares dipped 3 cents from their close at $69.10 Friday on the NYSE.

Shares of Hess Corp. edged 4 cents higher from their NYSE close Friday at $46.04.

Meanwhile, light sweet crude prices for January delivery slumped 36 cents to $58.61 a barrel Monday on the New York Mercantile Exchange.

This 6 month chart of the Oil Service HOLDRS Index - (AMEX stock symbol OIH) shows the index currently facing resistance at the 200 day moving average. The Index is presently well above it's 50 day moving average and any break through the 200 day moving average would be considered a very bullish signal and a buying opportunity.

Oil traded near a one-year low in New York on speculation that OPEC won't be able to meet its production cut pledges while U.S. crude inventories remain 12 percent above the five-year average.

Crude plunged 4.3 percent yesterday after the U.K.-based consultant Oil Movements said November shipments by OPEC will rise. OPEC agreed to cut output by 1.2 million barrels a day starting this month. Crude inventories rose 1.2 million barrels to 336 million last week, according to the U.S. Department of Energy.

``We need to see whether OPEC complies with the cuts,'' said Peter Luxton, a London-based energy analyst at Informa Global Markets. ``Some reports suggest they don't.''

Crude oil for December delivery fell 16 cents to $56.10 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 9:59 a.m. in London. The contract, which expires today, yesterday slumped $2.50 to $56.26, the biggest one- day decline since Aug. 17, 2005. Oil is set for the biggest weekly decline since October 2005.

Crude also fell because traders said heating fuel demand in the U.S. may be less than expected. Above-average temperatures in parts of the U.S. will cut demand, the government said yesterday.

The more actively New York-traded contract for January settlement was unchanged at $58.57 a barrel. Brent crude oil for January delivery rose 6 cents to $58.60 a barrel on the ICE Futures exchange at 9:59 a.m. London time.

The decline in oil prices prompted a drop in European oil stocks including BP Plc and Royal Dutch Shell Plc. The Dow Jones Stoxx 600 Index dropped 0.2 percent to 360.48 as of 9:41 a.m. in London.

Oil Company Shares

BP, Europe's second-largest oil company by market value, slid as much as 2.3 percent to 584.5 pence and traded at 590.5 pence at 9:39 a.m. in London. Shell, Europe's biggest, retreated at much as 1.4 percent to 1,852 pence and was at 1,863 pence at 09:38 a.m. in London.

The Organization of Petroleum Exporting Countries, which produces about 40 percent of the world's oil, agreed last month to reduce production by 1.2 million barrels a day starting Nov. 1 in an attempt to end a three-month price slide. The group will discuss production at its next meeting, scheduled for Dec. 14 in Abuja, Nigeria.

The OPEC crude oil basket price rose 14 cents to $55.47 a barrel yesterday, the group said in an e-mail. The price is a weighted average of 11 crude blends produced by OPEC nations.

``Market participants were skeptical whether OPEC would fully accomplish'' the reduction, said Andy Sommer, an analyst at HSH Nordbank AG in Hamburg. ``Now it is obvious it is less than expected.''

Mild Weather

Above-average temperatures will cover the northern third of the U.S. from coast to coast this winter as an El Nino weather pattern persists, the U.S. Climate Prediction Center said yesterday in a report that covers December through February. A warmer-than-normal winter in the region would reduce demand for fuels used to run household and commercial furnaces.

``There is no enthusiasm to drive oil higher,'' Informa Global's Luxton said. ``Psychology for the price is negative.''

U.S. natural-gas inventories climbed 5 billion cubic feet last week, for the first week in three, to 3.45 trillion, the Department of Energy said yesterday. The gain left stocks the highest they've ever been at this time of year and ample to handle peak demand during winter.

Gas for December delivery rose 2 cents to $7.775 per million British thermal units on the New York Mercantile Exchange at 9:40 a.m. in London. The contract yesterday fell 36.5 cents, or 4.5 percent.

Next Week

Crude oil may rebound next week on speculation that U.S. fuel supplies will fall as the Northern Hemisphere winter approaches. Twenty-seven of 52 analysts, traders and brokers, or 52 percent, said prices will increase, according to a Bloomberg News survey. Five expect a decline and 20 forecast little change.

The survey was conducted before prices plunged yesterday on the OPEC crude supply report and the U.S. weather forecast.

OPEC's shipments rose 0.9 percent in the month to Dec. 2 to 24.8 million barrels a day from the four weeks ended Nov. 4, Oil Movements said in a weekly report yesterday.

El Nino refers to the warming of the ocean surface off the western coast of South America. The phenomenon affects the jet stream, alters storm tracks and creates unusual weather patterns. A moderate to strong El Nino typically brings mild winters to the northern U.S.

Venezuela's tax agency said Thursday that French oil company Total SA owes the country US$17.3 million (euro13.5 million) in unpaid taxes from last year.

The company has 15 days to pay the amount owed plus a 10 percent fine, the agency said in a statement.

The fine comes after Venezuelan tax authorities billed Italian oil company Eni SpA the previous day for US$6 million (euro4.7 million) in 2005 taxes.

The government seized two oil fields from Total and Eni earlier this year after they refused to renegotiate operating contracts for the sites.

Crude oil fell to a 17-month low in New York as warm weather in the northern U.S. reduced fuel consumption and on signs OPEC won't cut production as much as pledged.

The Organization of Petroleum Exporting Countries agreed to reduce output by 1.2 million barrels a day starting Nov. 1. Prices plunged yesterday after consultant Oil Movements said November OPEC shipments will rise. The U.S. Climate Prediction Center said yesterday the El Nino weather pattern will cause a mild winter in the northern third of the U.S.

``A lot of what's happening is technical, we broke through $57 and that created a lot of selling,'' said Adam Sieminski, chief energy economist at Deutsche Bank Securities AG in New York. ``There's a huge amount of skepticism about the level of OPEC output. There seems to be a game right now between OPEC and the trading community.''

Crude oil for December delivery fell 61 cents, or 1.1 percent, to $55.65 a barrel at 10:01 a.m. on the New York Mercantile Exchange. Futures touched $54.86, the lowest since June 2005. The contract slumped $2.50 to $56.26 yesterday, the biggest one-day drop in 15 months. Prices, which plunged 6.6 percent this week, are down 1.2 percent from a year ago.

The December contract expires today. The more-active January contract fell 17 cents, or 0.3 percent, to $58.40 a barrel.

``There's always volatility when the contract expires,'' Sieminski said. ``You either have to sell it or take delivery. A lot of people obviously don't need deliveries next month.''

OPEC, which produces about 40 percent of the world's oil, will discuss production at its next meeting, which is scheduled for Dec. 14 in Abuja, Nigeria.

Home-Heating Demand

Home-heating demand in the Northeast, the region responsible for 80 percent of U.S. heating-oil use, will be 10 percent below normal through Nov. 24, said Weather Derivatives, a forecaster in Belton, Missouri.

``The decline is driven in large part by forecasts for mild weather,'' said Antoine Halff, a vice president and head of energy research at Fimat USA Inc. in New York. ``High distillate stocks in the U.S. are largely a legacy of the mild winter last year. I think this move lower will be short-lived because there have been a series of incredibly strong draws.''

Supplies of distillate fuel, including heating oil and diesel, fell 11 percent to 135 million barrels the past six weeks, according to an Energy Department report on Nov. 15. The declines left inventories last week 6.3 percent higher than the five-year average for this time of year, the department said.

Brent crude oil for January settlement fell 12 cents to $58.42 a barrel on the London-based ICE Futures exchange.

The Energy Department said natural-gas inventories rose 5 billion cubic feet for the week ended Nov. 10, marking the first increase in three weeks. Global Insight expected a rise of 2 billion. Total stocks now stand at 3.45 trillion cubic feet, up 176 billion cubic feet from the year-ago level, and 238 billion cubic feet above the five-year average, the government data said.

Petro-Canada, the third-largest oil company in Canada, plans to sell interests in five oil-sands properties in Alberta to focus development efforts on deposits in which it has larger stakes.

The Chard, Stony Mountain, Liege, Thornbury and Ipiatik properties contain an estimated 1.7 billion barrels of bitumen reserves, Calgary-based Petro-Canada said today in a statement. The company's stakes in the properties in northeastern Alberta range from 10 percent to 36 percent, spokesman Chris Dawson said.

``Petro-Canada is choosing to focus on its most-attractive assets'' with 100 percent ownership or a majority stake, Dawson said. ``With our core assets we have enough development work for several years, and we wouldn't get to these assets for some time.''

The sale will reduce Petro-Canada's estimated oil-sands reserves by about 17 percent to about 8 billion barrels, he said. Petro-Canada owns 55 percent of the Fort Hill oil-sands development, expected to produce as much as 170,000 barrels of extra-heavy oil a day by 2011.

London-based Harrison Lovegrove & Co. has been hired to advise on the sale, Petro-Canada said.

``We're looking for a cash transaction but we will entertain other offers,'' said Dawson of the planned sale, which the company expects to complete by mid-2007.

The properties contain reserves buried too deep for surface mining and must be extracted with wells, he said.

Oil-Sands Interest

Producer interest in Alberta's tar-like oil sands surged after growing oil demand and political tension in the Middle East sent futures prices on the New York Mercantile Exchange to a record $78.40 a barrel in July.

Spending of as much as C$125 billion by Petro-Canada, Suncor Energy Inc. and others will almost triple the region's output to 3 million barrels a day by 2015, Canadian regulators have said.

Shares of Petro-Canada rose 48 cents to C$51.19 at 1:30 p.m. on the Toronto Stock Exchange. The stock has gained 9.7 percent this year.

Imperial Oil Ltd., about 70 percent owned by Exxon Mobil Corp., is Canada's largest oil company by 2005 sales, followed by EnCana Corp.

Oil prices rose Wednesday after the U.S. government reported that gasoline inventories declined for the fifth straight week to their lowest level this year.

Crude prices failed to breach $60 a barrel, though, as supply worries were calmed by a big rise in crude inventories, mild weather in the Northeast, and skepticism that OPEC cuts will come to fruition.

Light sweet crude for December delivery rose 48 cents to settle at $58.76 a barrel Wednesday on the New York Mercantile Exchange, easing back after reaching $59.40 in earlier trading.

Heating oil futures rose 2.92 cents to settle at $1.6924 a gallon, and unleaded gas rose 3.47 cents to $1.5795 a gallon. Natural gas futures rose 14.3 cents to settle at $8.120 per 1,000 cubic feet.

It's unlikely crude prices will emerge anytime soon from their recent range of about $58 to $62 a barrel, analysts say. After declining from a summer peak above $78 a barrel, oil prices have hung close to these levels, even as the Organization of Petroleum Exporting Countries in October announced a 1.2 million barrel a day production cut and violence in Nigeria raised supply worries.

"The market's been kind of stuck in this range for a month and a half," said Tom Bentz, analyst at BNP Paribas Commodity Futures in New York. "We have to go a long way to the upside before we break higher."

Some OPEC members have suggested they might make further cuts at their meeting in December. Until hard evidence surfaces over the next few weeks that the OPEC cuts are being implemented in earnest, though, many traders remain skeptical _ which has helped to keep prices from swinging dramatically higher on falling product inventories and still-strong demand.

Crude oil inventories rose 1.3 million barrels to 336.0 million barrels last week, the Energy Information Administration said Wednesday in its weekly report.

Gasoline inventories fell by 3.7 million barrels to 200.3 million barrels.

U.S. inventories of gasoline have fallen about 7 percent over the past five weeks to levels that are about the same as a year ago, when Gulf Coast producers were still recovering from hurricanes Katrina and Rita. Refiners have been trimming production on the back of a 25 percent drop in oil prices over the past few months.

"Gasoline inventories flat on a year ago really does indicate that this market is anything but oversupplied," said Tim Evans, energy analyst at Citigroup Global Markets. He added, though, that the decline appears to be a result of planned refinery maintenance, rather than any emergency.

Distillates, which include heating oil and diesel fuel, fell by 3.6 million barrels to 135.0 million barrels. A small rise in heating oil was offset by a large drop in diesel fuel.

Demand for distillate fuel has been stronger than usual. The EIA reported that demand for distillates over last four weeks has been the highest four-week average ever for any period that doesn't include January or February, when cold weather usually causes heating oil demand to peak.

The EIA noted, though, that the high demand numbers could be due to retailers and consumers buying fuel to pad their own inventories ahead of winter.

Refinery production decreased to 87.3 percent last week from 88.1 percent in the previous week.

Profit margins for oil companies have been squeezed as oil prices have dropped; on Tuesday, the Commerce Department reported that lower gasoline sales were the main reason U.S. retail spending fell 0.2 percent in October.

Last week the International Energy Agency trimmed its outlook for 2006 global oil demand growth to 1.1 percent from 1.2 percent. The forecast for growth in demand for 2007 was maintained at 1.7 percent.

Summary of Weekly Petroleum Data for the Week Ending November 10, 2006

U.S. crude oil refinery inputs averaged over 14.9 million barrels per day during
the week ending November 10, down 221,000 barrels per day from the previous
week's average. Refineries operated at 87.3 percent of their operable capacity
last week. Gasoline production decreased slightly last week compared to the
previous week, averaging nearly 8.7 million barrels per day, while distillate
fuel production remained relatively constant, averaging 4.0 million barrels per
day.

U.S. crude oil imports averaged nearly 9.5 million barrels per day last week,
down 337,000 from the previous week. Over the last four weeks, crude oil imports
have averaged 9.7 million barrels per day. Total motor gasoline imports
(including both finished gasoline and gasoline blending components) last week
averaged nearly 1.1 million barrels per day. Distillate fuel imports averaged
328,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) rose by 1.3 million barrels compared to the previous week.
At 336.0 million barrels, U.S. crude oil inventories remain well above the upper
end of the average range for this time of year. Total motor gasoline
inventories dropped by 3.7 million barrels last week, and are now in the lower
half of the average range. Distillate fuel inventories fell by 3.6 million
barrels, and are in the upper half of the average range for this time of year.
A very slight increase in high-sulfur distillate fuel (heating oil) inventories
was more than compensated by a significant decline in diesel fuel (both
ultra-low-sulfur and 15 ppm to 500 ppm sulfur) inventories. Total commercial
petroleum inventories declined by 9.0 million barrels last week, but remain
above the upper end of the average range for this time of year.

Total products supplied over the last four-week period has averaged over 21.3
million barrels per day, or 4.8 percent more than averaged over the same period
last year (when Hurricanes Katrina and Rita lowered demand levels). Over the
last four weeks, motor gasoline demand has averaged over 9.3 million barrels per
day, or 3.1 percent above the same period last year. Distillate fuel demand has
averaged nearly 4.5 million barrels per day over the last four weeks, or 9.5
percent above the same period last year. Jet fuel demand is up 4.1 percent over
the last four weeks compared to the same four-week period last year.

Oil prices regained ground Wednesday as the market adjusted to declines the day before and traders awaited release of the weekly U.S. inventory report.

Light sweet crude for December delivery rose 19 cents to US $58.47 a barrel in midmorning Asian electronic trading on the New York Mercantile Exchange. After declining 25 percent from a summer peak above $78 a barrel, oil prices have hung close to the $60 level over the past month, even as the Organization of Petroleum Exporting Countries announced a 1.2 million barrel a day production cut and violence in Nigeria raised supply worries.

Commodities analyst Mark Pervan, with Daiwa Securities in Melbourne, Australia, suggested the market was positioning ahead of the weekly U.S. inventories report, which comes out later Wednesday. Last week showed declines in U.S. supplies of gasoline and diesel fuel, though oil and natural gas supplies are still ample _ above the average for this time of year.

In other Nymex trading, heating oil futures rose less than a penny to US$1.6700 a gallon on the Nymex, while natural gas futures dropped 0.3 cent to US$7.974 per 1,000 cubic feet.

Crude oil futures rose Tuesday as markets remained concerned about supplies heading deeper into winter in the Northern Hemisphere.

With the seasonal rise in oil demand still ahead, and another month before the Organization of Petroleum Exporting Countries meets again, prices were holding near $60 a barrel.

Light sweet crude for December delivery on the New York Mercantile Exchange rose 34 cents to $58.92 a barrel in electronic trading by midday in Europe. December Brent at London's ICE Futures exchange rose 50 cents to $59.55.

Heating oil futures rose 1.85 cents to $1.6785 a gallon on the Nymex, while unleaded gasoline futures increased 0.6 cent to $1.5430 a gallon. Natural gas futures rose 5 cents to $7.944 per 1,000 cubic feet.

"The bottom line fundamentally is that we have seen heavier withdrawals than expected in refined products stocks over the last four weeks," analyst Peter Beutel at advisory firm Cameron Hanover in New Canaan, Connecticut, said in a note to clients.

"The (U.S.) Energy Information Administration is expecting more to come, more larger-than-normal draws, but the International Energy Agency is telling us that we currently have two days more supply in inventories than we did a year ago. One can take what he or she wants from those conflicting pieces of information."

The IEA, in its monthly report Friday, trimmed its outlook for 2006 global oil demand growth to 1.1 percent from 1.2 percent. Demand growth for 2007 held at 1.7 percent.

Still, the energy body also forecast a 2.6 percent jump in fourth-quarter global energy demand, citing high consumption in the United States. The agency noted U.S. consumption was being compared with figures when the impact of Hurricane Katrina and mild weather curbed demand a year ago.

Demand for oil from OPEC was expected to rise 1.6 million barrels a day because of lower output from non-OPEC countries, the IEA said.

Oil prices fell by $1 a barrel Monday despite expectations of higher demand and OPEC production cuts. Mild weekend weather in the Northeast sapped demand for home-heating fuels.

Oil prices have tumbled from a July high above $78 a barrel, trading in a range of $57-$61 over the past five weeks. On Monday, traders took profits after a price leap above $61 last week.

On Monday, light sweet crude futures declined by $1.01 to settle at $58.58 a barrel on the New York Mercantile Exchange. December Brent crude on London's ICE Futures exchange slid 66 cents to settle at $59.05 a barrel.

The market was still digesting a monthly report released Friday by the International Energy Agency, in which it trimmed its outlook for 2006 global oil demand growth to 1.1 percent from 1.2 percent. Demand growth for 2007 held at 1.7 percent.

Still, the IEA also forecast a 2.6 percent jump in fourth-quarter global energy demand, citing high consumption in the United States. The agency noted U.S. consumption was being compared with figures when the impact of Hurricane Katrina and mild weather curbed demand a year ago.

And the IEA said demand for oil from the Organization of Petroleum Exporting Countries was expected to rise 1.6 million barrels a day because of lower output from non-OPEC countries.

The outlook points to tighter market conditions and higher prices just as OPEC oil production cuts announced in late October are going into effect.

"The market is likely to remain tight, due to the recent cut in OPEC supplies, and still relatively strong demand, which could lead to a decline in inventories," said Vienna's PVM Oil Associates.

Heating oil futures fell 3.66 cents to settle at $1.66 a gallon on the Nymex, while unleaded gasoline futures fell 2.57 cents to settle at $1.537 a gallon. Natural gas futures slipped 10 cents to settle at $7.894 per 1,000 cubic feet.

Oil prices were flat Monday on a lack of fresh news to move the market, hovering around the same price range that has held for several weeks.

Oil prices have tumbled from a July high above US$78 a barrel, trading in a range of US$57-61 over the past five weeks. On Monday, traders took profits after a price leap above US$61 the day before.

Monday's prices were down a penny to US$59.58 in midmorning Asian electronic trading on the New York Mercantile Exchange.

The market is likely still digesting a monthly report released Friday by the International Energy Agency, in which it trimmed its outlook for 2006 global oil demand growth to 1.1 percent from 1.2 percent. Demand growth for 2007 held at 1.7 percent.

The IEA also forecast a 2.6 percent jump in fourth-quarter global energy demand, citing high consumption in the United States. The agency noted U.S. consumption was being compared with figures when the impact of Hurricane Katrina and mild weather curbed demand a year ago.

The IEA said demand for oil from the Organization of Petroleum Exporting Countries was expected to rise 1.6 million barrels a day because of lower output from non-OPEC countries.

The outlook points to tighter market conditions and higher prices just as OPEC oil production cuts announced in late October are going into effect.

In other Nymex trading Monday, heating oil futures rose 0.54 cent to US$1.7020 a gallon and natural gas futures increased 1.8 cent to US$7.812 per 1,000 cubic feet.

Crude oil may rise next week because surging U.S. fuel consumption is reducing stockpiles as the Northern Hemisphere winter approaches.

Twenty-one of 43 analysts, traders and brokers, or 49 percent, said prices will increase, according to a Bloomberg News survey. Five expect a decline and 17 forecast little change.

World oil demand peaks in the fourth quarter as refineries increase production of heating fuel. Implied demand for distillate fuel, or diesel and heating oil, averaged 4.4 million barrels a day over the four weeks to Nov. 3, up 8.9 percent from a year earlier, the Energy Department said this week.

``We've seen incredible demand for products, which has caused inventories to fall at a dramatic rate,'' said Phil Flynn, vice president of risk management with Alaron Trading Corp. in Chicago. ``We've been complacent about inventories for a while now but that may be changing as the surplus padding disappears. At the same time we are seeing OPEC cut output.''

Crude oil for December delivery rose $2.02, or 3.4 percent, to $61.16 a barrel on the New York Mercantile Exchange in the first four days of trading this week. Some 41 percent of analysts, traders and brokers surveyed last week expected prices to be little changed. Futures are up 3.8 percent from a year ago.

Gasoline use averaged 9.4 million barrels a day in the past four weeks, up 3.9 percent from a year earlier, according to a Nov. 8 report from the Energy Department, which tracks shipments from refineries, pipelines and terminals to calculate demand.

Distillate inventories fell 2.68 million barrels to 138.6 million last week, the report showed, with stockpiles having dropped 8.5 percent in the five weeks through Nov. 3. Within the distillate category, diesel dropped 2.92 million barrels and heating oil rose 248,000 barrels. Gasoline supplies slipped 584,000 barrels to 204 million last week.

OPEC Production

Members of the Organization of Petroleum Exporting Countries agreed on Oct. 20 to reduce oil output by 1.2 million barrels a day to stem a three-month slide in prices. The reductions started Nov. 1.

The group, which pumps about 40 percent of the world's oil, may cut production again when it meets on Dec. 14, Saudi Arabia's oil minister, Ali al-Naimi, said on Nov. 6.

``We're still digesting the Saudi statement that the market is over-supplied and another cut may be necessary,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``The Saudis are moderates and usually don't push for cuts.''

Untimely Cut

OPEC's reduction is untimely because demand for heating fuel will soon rise, Claude Mandil, executive director of the International Energy Agency, said yesterday. The Paris-based group was set up in 1974 to advise industrialized nations on energy policy.

Analysts looking for little-changed or falling prices said that the decline in stockpiles was insufficient to push futures out of their trading range. Diesel, heating oil and gasoline supplies last week were above the five-year average for the period, the department said. Futures have traded between $56.55 and $61.79 for the past month.

``Crude oil continues to fluctuate within a relatively narrow trading range,'' said Gerard Burg, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. ``In the absence of a major disruption to supply, prices will remain range-constrained until demand builds toward the winter.''

Warm weather in the Northeast has reduced demand for heating fuel in the region, responsible for 80 percent of U.S. heating-oil consumption. Home-heating use there will be 23 percent below normal through Nov. 16, said Weather Derivatives, a forecaster in Belton, Missouri.

Oil and gas company Talisman Energy Inc. said Thursday it found natural gas in an emerging exploration play in west central Alberta.

The Canadian company, based in Calgary, Alberta, said it is still in the early exploration stage, but it estimates between 200 billion cubic feet and 300 billion of contingent and prospective natural gas resources on its Ram acreage. The Ram area is southwest of Talisman's successful Central Alberta Foothills structural play, and the company holds over 48,000 acres.

"The potential from the Ram area could be significant for Talisman," President and Chief Executive Jim Buckee said in a statement. "The discovery of potentially commercial gas in the Cambrian section represents a first in Alberta and a significant exploration success.

Talisman plans to spend about $100 million on equipment, infrastructure and drilling in the area next year. It has begun engineering work on the infrastructure needed to bring the gas to market, with construction expected to begin late this year.

Talisman expects first production in the third quarter of 2007.

Working gas in storage was 3,445 Bcf as of Friday, November 3, 2006, according to EIA estimates. This represents a net decline of 7 Bcf from the previous week. Stocks were 225 Bcf higher than last year at this time and 246 Bcf above the 5-year average of 3,199 Bcf. In the East Region, stocks were 74 Bcf above the 5-year average following net withdrawals of 10 Bcf. Stocks in the Producing Region were 116 Bcf above the 5-year average of 894 Bcf after a net injection of 2 Bcf. Stocks in the West Region were 56 Bcf above the 5-year average after a net addition of 1 Bcf. At 3,445 Bcf, total working gas is above the 5-year historical range.

Oil prices rose on Wednesday after U.S. inventory data showed a decline in fuel stockpiles and OPEC ministers pledged to push ahead with output cuts agreed upon last month.

U.S. crude was up 84 cents to $59.77 a barrel by 1827 GMT. London Brent crude was up $1.07 at $59.55.

Inventory data released by the U.S. Energy Information Administration on Wednesday showed inventories of distillates and gasoline fell unexpectedly, while crude stocks rose less than anticipated.

Distillate stocks fell by 2.7 million barrels, much more than the 500,000-barrel draw expected. Gasoline inventories, which had been expected to be unchanged, declined by 600,000 barrels. Crude stocks rose 400,000 barrels, below the forecast for a 700,000-barrel build.

"The bullish tone is diluted by the fact that, in the distillate breakdown, heating oil stocks actually rose by 300,000 (barrels)," BNP Paribas said in a note.

High inventory levels have worried members of the Organization of Petroleum Exporting Countries. On Wednesday, Gulf members of the producer group, who met in Abu Dhabi, said they were fully committed to the cut of 1.2 million barrels per day agreed in Doha last month.

"All of OPEC is committed (to the cuts)," United Arab Emirates Oil Minister Mohammed bin Dhaen al-Hamli said.

Ministers, including Saudi Oil Minister Ali al-Naimi, have said the market remains oversupplied and that further cuts could be agreed on at OPEC's next meeting on December 14.

High inventory levels, combined with skepticism about OPEC's commitment to production cuts, have helped to pull prices down by around 25 percent from the record high of $78.40 for U.S. crude hit in July.

But Goldman Sachs said inventories were progressively being eroded by stronger-than-expected demand.

"We continue to believe that the recent, lower oil price levels will prove short-lived, particularly as the lower prices have contributed to exceptionally strong demand growth in the U.S.," the investment bank wrote in a report.

It maintained its price forecast of $75.50 for U.S. crude next year.

U.S. crude oil refinery inputs averaged nearly 15.2 million barrels per day
during the week ending November 3, down 124,000 barrels per day from the
previous week's average. Refineries operated at 88.1 percent of their operable
capacity last week. Gasoline production decreased slightly last week compared
to the previous week, averaging over 8.7 million barrels per day, while
distillate fuel production also declined, averaging 4.0 million barrels per day.

U.S. crude oil imports averaged 9.8 million barrels per day last week, down
306,000 from the previous week. Over the last four weeks, crude oil imports have
averaged nearly 10.0 million barrels per day. Total motor gasoline imports
(including both finished gasoline and gasoline blending components) last week
averaged 1.0 million barrels per day. Distillate fuel imports averaged 224,000
barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) increased by 0.4 million barrels compared to the previous
week. At 334.7 million barrels, U.S. crude oil inventories remain well above
the upper end of the average range for this time of year. Total motor gasoline
inventories declined by 0.6 million barrels last week, and are in the upper end
of the average range. Distillate fuel inventories dropped by 2.7 million
barrels, but are just above the upper end of the average range for this time of
year. A slight increase in high-sulfur distillate fuel (heating oil)
inventories was more than compensated by a significant decline in regular diesel
fuel (15 ppm to 500 ppm sulfur) inventories. Total commercial petroleum
inventories declined by 6.8 million barrels last week, but remain well above the
upper end of the average range for this time of year.

Total products supplied over the last four-week period has averaged nearly 21.4
million barrels per day, or 5.4 percent more than averaged over the same period
last year (when Hurricanes Katrina and Rita lowered demand levels). Over the
last four weeks, motor gasoline demand has averaged nearly 9.4 million barrels
per day, or 3.9 percent above the same period last year. Distillate fuel demand
has averaged over 4.4 million barrels per day over the last four weeks, or 8.9
percent above the same period last year. Jet fuel demand is up 1.2 percent over
the last four weeks compared to the same four-week period last year.

Oil prices rose Wednesday as traders awaited the weekly U.S. crude inventory report and assessed the possibility of further OPEC production cuts.

Light, sweet crude for December delivery gained 24 cents to $59.17 a barrel in European electronic trading on the New York Mercantile Exchange by midday in Europe. December Brent crude on London's ICE Futures exchange rose 31 cents to $58.79 a barrel.

Heating oil futures edged lower to $1.6792 a gallon on the Nymex, where unleaded gasoline futures rose slightly to $1.5250 a gallon. Natural gas futures gained 9 cents to $7.847 per 1,000 cubic feet.

The U.S. inventory report to be released later in the day was expected to show modest increases in crude and gasoline stocks. Last week, crude oil stocks rose by 2 million barrels to 334.3 million barrels. Demand is currently low as the Northern Hemisphere winter has yet to set in.

The market also is mulling the possibility that the Organization of Petroleum Exporting Countries would implement additional production cuts in December following a plan to reduce oil output by 1.2 million barrels a day starting Nov. 1. Analysts and traders are also questioning how many of the 11 OPEC members will deliver on the cuts they've already promised.