Oil prices sagged nearly all day Tuesday, then zipped higher toward the end of the trading session. The late-day buying spree was a technical rally, brokers said, as traders who had expected prices to fall even further rushed in to cover losing bets.

After falling as low as $57.05 a barrel, light sweet crude for December delivery on the New York Mercantile Exchange settled 37 cents higher at $58.73 a barrel. In London, Brent crude rose 35 cents to settle at $59.03 a barrel on the ICE Futures exchange.

On Monday, crude-oil futures declined by more than $2 a barrel amid mild weather on the East Coast and an expectation that U.S. government data scheduled to be released on Wednesday will show rising inventories of crude. The expiration of November futures contracts for gasoline and heating oil on Tuesday also helped to drag prices lower, brokers said, as did doubts about OPEC's ability to implement its plan to cut 1.2 million barrels a day of production.

Prudential Financial broker Aaron Kildow said prices for oil and refined products could continue to drift lower amid mild autumn temperatures. "This is mostly a weather related market right now," said Kildow, adding that the U.S. is awash in fuel heading into winter.

The most recent report from the federal Energy Information Administration showed commercially available supplies of crude oil in the U.S. stand 5 percent above year ago levels at 332 million barrels, while inventories of distillate, which include heating oil, were 14 percent above year ago levels at 144 million barrels. The next report is scheduled to be released Wednesday.

Alaron Trading Corp. analyst Phil Flynn said energy demand is holding up pretty well in the U.S. despite historically high prices and slowing economic growth. The recent decline in prices, he said, is more a function of increasing supplies - something that could prove short-lived if OPEC carries out its intended output cut.

If energy demand does weaken as a consequence of softer economic growth, then there will be pressure on OPEC to slash its output even further, a scenario that Flynn sees as bearish for oil prices.

All things being equal, Flynn said he is betting on prices bottoming out soon, and then inching higher as the dead of winter arrives.

Testu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo, said that because "huge amounts of oil are available ... I don't think these (OPEC) cuts will have a huge impact."

"We'll have to watch the U.S. winter," Emori said.

Last week, oil prices surged by $2 a barrel after EIA data showed an unexpected decline in U.S. crude-oil inventories. But some analysts believe the market overreacted to the data by failing to account for the impact of a brief shutdown of the Louisiana Offshore Oil Port, through which 10 percent of all U.S. oil imports flow.

That rethinking helped send oil prices sharply lower on Monday, when Nymex heating oil futures plunged to a 15-month low.

On Tuesday, Nymex heating oil futures dipped 1.46 cent to settle at $1.5869 a gallon, while gasoline futures gained less than a penny to settle at $1.4646 a gallon. Natural gas futures climbed 11.8 cents to settle at $7.534 per 1,000 cubic feet.

Prudential Financial's Kildow said he expects to see prices begin leveling off as winter approaches. "I would expect the market to find a bottom down here, just based on the time of year," he said.

Oil prices dropped below $58 a barrel Tuesday, extending a decline of more than $2 a barrel a day earlier as traders responded to mild weather on the East Coast and awaited fresh U.S. data that is expected to show rising inventories of crude.

The expiration of November futures contracts for gasoline and heating oil helped drag prices lower, brokers said, and the market also remains skeptical about OPEC's ability to implement its plan to cut 1.2 million barrels a day of production.

Prudential Financial broker Aaron Kildow said prices for oil and refined products could continue to drift lower amid mild autumn temperatures. "This is mostly a weather related market right now," said Kildow, adding that the U.S. is awash in fuel heading into winter.

The most recent report from the federal Energy Information Administration showed commercially available supplies of crude oil in the U.S. stand 5 percent above year ago levels at 332 million barrels, while inventories of distillate, which include heating oil, were 14 percent above year ago levels at 144 million barrels. The next report is scheduled to be released Wednesday.

Also weighing on the market was data released Tuesday that showed consumers' confidence in the economy weakened a bit in October. On Friday, U.S. data showed that the economy grew at the slowest rate in more than three years during the July-to-September period.

Testu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo, said that because "huge amounts of oil are available ... I don't think these (OPEC) cuts will have a huge impact."

"We'll have to watch the U.S. winter," Emori said.

Light sweet crude for December delivery on the New York Mercantile Exchange fell 91 cents to $57.450 a barrel. In London, Brent crude fell 38 cents to $58.30 a barrel on the ICE Futures exchange.

Last week, oil prices surged by $2 a barrel after EIA data showed an unexpected decline in U.S. crude-oil inventories. But some analysts believe the market overreacted to the data by failing to account for the impact of a brief shutdown of the Louisiana Offshore Oil Port, through which 10 percent of all U.S. oil imports flow.

That rethinking helped send oil prices sharply lower on Monday, when Nymex heating oil futures plunged to a 15-month low.

On Tuesday, Nymex heating oil futures dipped less than a penny to $1.594 a gallon, while gasoline futures slipped more than 2 cents to $1.4325 a gallon. Natural gas futures declined by 10 cents to settle at $7.317 per 1,000 cubic feet.

Prudential Financial's Kildow said he expects to see prices begin leveling off as winter approaches. "I would expect the market to find a bottom down here, just based on the time of year," he said.

The U.S. Interior Department has dropped claims that the Chevron Corp. (NYSE CVX) underpaid the government for natural gas produced in the Gulf of Mexico, the New York Times reported on Tuesday.

The decision could have far-reaching impacts, allowing energy companies to avoid paying hundreds of millions of dollars in royalties, the Times reported.

The Interior Department had ordered Chevron to pay $6 million in additional royalties but could have sought tens of millions more if it prevailed.

The decision sets a precedent that could make it easier for oil and gas companies to lower the value of what they pump each year from federal property and thus their payments to the government, the Times reported.

The agency notified Chevron of its decision in a letter on August 3, which the Times obtained under the Freedom of Information Act.

Crude oil traded below $59 a barrel Tuesday after posting the biggest one-day decline in more than a year yesterday on forecasts that warm U.S. weather will curb demand and bolster stockpiles.

Higher-than-usual temperatures are expected in most of the U.S. from Nov. 6 until Nov. 12, the National Weather Service reported. U.S. crude inventories, already 12 percent above their 5 year average probably rose 2.7 million barrels last week, according to a Bloomberg News survey.

``Crude oil inventories in the U.S. and all over the world are sufficient,'' said Tetsu Emori, chief commodity strategist at Mitsui Bussan Futures Ltd. in Tokyo. ``The oil price is losing momentum.''

Crude oil for December delivery traded at $58.30 a barrel, down 6 cents, in after-hours electronic trading on the New York Mercantile Exchange at 11:18 a.m. Singapore time.

Yesterday, the contract fell $2.39, or 3.9 percent, to $58.36, the biggest one-day decline since Aug. 17, 2005. Futures were down 4.6 percent from a year ago. Prices have fallen 25 percent from the record $78.40 a barrel reached July 14.

``You get a forecast for warmer weather and down prices come,'' said Rowan Menzies, a commodity market analyst at Commodity Warrants Australia Pty in Sydney. ``The U.S. looks pretty well supplied as of today.'

In London, Brent crude oil fell 3 cents to $58.65 a barrel on the ICE Futures exchange at 11 a.m. Singapore time.

U.S. Stockpiles

U.S. crude oil stockpiles unexpectedly fell in the week ended Oct. 20 when the Louisiana Offshore Oil Port, the largest U.S. import terminal, shut because of bad weather. The port, which was closed for about 70 hours, caught up on imports in about two days.

U.S. stockpiles of crude oil, diesel, heating oil and gasoline in the week ended Oct. 20 were higher than the five- year average for the period, the Energy Department said last week.

The forecast for mild temperatures in the U.S. Northeast is delaying the expected rise in demand as the coldest winter weather period approaches, said Andrew Harrington, an industrials analyst at Australia & New Zealand Banking Group Ltd. in Sydney.

``You'd be looking for late December-January to be the big cold period in the Northeast of the U.S. and we should start seeing some increase in demand heading into that period,'' Harrington said. ``It seems to be a bit slower in coming than usual. Some anticipation of that had been built in to the price and now we're seeing it being taken out again.''

OPEC Cuts

The decline in oil prices since mid-July prompted the Organization of Petroleum Exporting Countries, which produces about 40 percent of global supply, to agree to reduce output by 1.2 million barrels a day starting Nov. 1. OPEC ministers will review their cuts when they next meet on Dec. 14.

Saudi Arabia, the biggest oil producer, will definitely implement the 1.2 million barrel-a-day reduction in output that the group announced earlier this month, Khalid al-Falih, a senior vice president with state-run Saudi Aramco, said yesterday.

``There will be no delaying, no backpedaling,'' al-Falih said at a meeting with U.S. oil company officials in Washington.

Oil prices also fell yesterday because of waning concerns about the security of Saudi Arabia's Ras Tanura oil terminal, Menzies said.

Naval forces from the U.S.-led coalition were sent to protect the terminal after the threat of a terrorist attack from the sea, reports said.

Crude oil fell the most in more than three weeks as warm U.S. weather reduced demand for heating fuels, helping inventories to increase.

Supplies rose 2.75 million barrels, according to the median of eight responses in a Bloomberg News survey. Stockpiles fell the previous week when the Louisiana Offshore Oil Port, the largest U.S. import terminal, shut because of bad weather. Higher-than-normal temperatures will cover most of the U.S. from Nov. 6 through Nov. 12, the National Weather Service reported.

``Inventories are high, spare capacity is growing and demand is going nowhere,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Until winter hits, demand will be somnolent.''

Crude oil for December delivery fell $2, or 3.3 percent, to $58.75 barrel at 11:28 a.m. on the New York Mercantile Exchange. Futures are down 4 percent from a year ago. Prices have plunged 25 percent from the record of $78.40 a barrel reached July 14 amid concern that fighting in Lebanon would spread through the Middle East, source of a third of world's oil.

``Inventories are looking healthier and the weather should be getting warmer,'' said Ric Navy, a broker at BNP Paribas SA in New York. ``The market is vulnerable on the downside. OPEC will be tested in the weeks ahead.''

OPEC Production Cut

The oil price decline led the Organization of Petroleum Exporting Countries, which produces about 40 percent of global supply, to agree to cut output by 1.2 million barrels a day starting Nov. 1. OPEC ministers will review their cuts when they next meet on Dec. 14 in Abuja, Nigeria.

``It is not ruled out that a new reduction can be decided at the meeting that OPEC will hold in Abuja, Nigeria, in December, if the instability continues in the international oil market,'' Shokri Ghanem, chairman of Libya's state-run National Oil Corp., said in comments published on the company's Web site.

Ghanem instructed National Oil to reduce production by 72,000 barrels a day starting Nov. 1. Libya, the eighth-largest member of OPEC, produced 1.7 million barrels of crude oil a day in September, according to Bloomberg estimates.

``We are dubious about OPEC's cuts,'' said Kyle Cooper, director of research at IAF Advisors in Houston. ``Any actual cuts may hurt OPEC. Prices have risen in the face of high inventories for three years now because of fears about spare capacity, and now they may give us that cushion.''

Oil rose on Oct. 27 after reports that U.K. forces were sent to Saudi Arabia's Ras Tanura oil terminal. Saudi Arabia is the world's top oil exporter. Nawaf Obaid, managing director of the Saudi Strategic National Security Assessment Project and an independent consultant, said the deployment is part of regular exercises and had nothing to do with defending oil installations.

Eroding Premium

``The rise on Friday was based on fears of a terrorist attack in Saudi Arabia but nothing happened over the weekend,'' said Jim Wyckoff, senior markets analyst at TradingEducation.com in Wesley Chapel, Florida. ``There's been a geopolitical premium added to the price in recent years but it's eroding. Threats may have increased but the oil has continued to flow.''

Brent crude oil for December settlement fell $2.22, or 3.6 percent, to $58.86 a barrel on the London-based ICE Futures exchange.

Oil prices slipped below $60 a barrel Monday on doubts that OPEC would pursue proposed production cuts and as geopolitical concerns lifted.

Light, sweet crude for December fell 89 cents to $59.86 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. Brent crude fell by $1.10 to $59.98 on the ICE Futures exchange in London.

Traders are watching to see how quickly the 11 members of the Organization of Petroleum Exporting Countries move to cut production after announcing that as a group they would reduce output by 1.2 million barrels day.

"Saudi Arabia, the United Arab Emirates and Iran have told some of their customers that they will cut production in coming months," said Victor Shum, an energy analyst at Purvin & Gertz in Singapore. But this hasn't had much impact on prices "because the market already priced in some output cuts from OPEC," he said.

In its daily energy report, Vienna's PVM Oil Associates suggested that the market may not be convinced all the production cuts would be enacted, noting that "data for October ... reportedly showed that OPEC output in fact increased slightly to 30.18 million barrels per day from September levels."

Peter Lengyel of PVM speculated that the downward trend could be nothing more than a correction after "a relatively sharp increase of almost 7 percent" last week.

Prices rose Friday after a British navy official said that a threat from al-Qaida last month targeting Gulf oil terminals resulted in stepped-up security and vigilance at Saudi Arabia's Ras Tanura terminal, as well as a refinery in Bahrain.

"There has been no disruption in oil flows" from the region related to the report, said Shum. "It reminds the market that geopolitics haven't completely disappeared from the scene."

Significant cuts, along with the arrival of winter weather to the Western hemisphere, could raise the floor under the market, however, with demand for heating oil and natural gas leading the way.

"What is going to affect pricing in the coming weeks will really depend on how cold it gets in the Northern Hemisphere winter and the broader global economic outlook," said Shum. "Weather again will be the wild card."

Heating oil futures fell by more than 3 cents to $1.6598 a gallon (3.8 liters.) Gasoline was down more than 2 cents, at $1.5355, and natural gas futures declined by more than 28 cents to $7.540 per 1,000 cubic feet.

The one year chart of the AMEX Oil Services Trust (OIH) shows strong support at 120. The sector may be poised to move higher after recently crossing the 50 day moving average.

Oil nudged higher on Monday, extending last week's gains while traders awaited further signs of OPEC's compliance with output curbs and kept a close eye on Saudi oil facilities amid heightened security activity.

U.S. light, sweet crude for December delivery was up 13 cents a barrel at $60.88 in Globex electronic trading by 2343 GMT after gaining 39 cents on Friday, when news of a possible threat against a key Saudi export terminal spooked traders.

The December contract rose 2.4 percent last week as some OPEC members began to implement output cuts, U.S. crude stocks fell sharply and chilly winter weather made an early appearance, helping revive prices from a 2006 low of $56.55 on Oct. 20.

Prices rose on Friday after Britain's Royal Navy said coalition forces were helping guard oil installations in top exporter Saudi Arabia -- in particular the Ras Tanura terminal, the kingdom's primary export point -- as part of stepped-up security following an al Qaeda threat last month. [nL27886601]

Industry sources said exports continued unaffected but the news revived fears of a possible disruptive attack by al Qaeda, which has repeatedly urged targetting Gulf oil infrastructure. An attack on Saudi's Abqaiq processing plant in February was foiled.

Dealers will be watching this week for further signs that other OPEC members will follow Saudi Arabia and the UAE in telling customers how they will curb production to implement an agreed 1.2 million barrel per day (bpd) OPEC cut.

"The cut...seems to be taking hold in the mind of the market and so far, seems to be getting backed up with actual shipping reduction notices from the major OPEC members," said analyst Martin King at FirstEnergy Capital Corp.

"We believe that reduction announced by OPEC will have a material impact on global stocks of crude oil and products."

Data for October that emerged on Friday shook some traders' confidence as it showed that output actually rose fractionally to 30.18 million bpd from the month before, consultant Petrologistics said on Friday, despite pledges that month from Nigeria and Venezuela to voluntarily cut back.

Signs of an early or chilly winter in the U.S. Northeast have lent some support to prices, although a Friday forecast by Meteorlogix called for temperatures to return to seasonal norms by later this week, tempering heating fuel demand.

Most longer-term projections have called for a normal to colder than usual winter, potentially eroding heating fuel stocks that last week stood 7 percent higher than a year earlier. Crude oil stocks are well above their five-year range.

"While the inventory overhang in the U.S. still remains large, GS research notes that recent cold temperatures in the main heating oil regions of the U.S. and strong transportation demand will likely continue to reduce the surplus, forming the basis for a more sustainable rally in oil prices," Goldman Sachs said.

Speculators on the NYMEX crude oil market marginally deepened their net short positions to just over 5,000 lots in the week to Oct. 24, data showed on Friday. They more than doubled net heating oil short positions to over 8,000 lots.

Bolivia to Sign Nationalization Deals

President Evo Morales was set to complete his ambitious oil and gas nationalization plan late Saturday with the last-minute signing of contracts allowing Petrobras, Repsol YPF and other international companies to continue operating in Bolivia under state control.

Presidential spokesman Alex Contreras told the media the government had finalized talks with the eight foreign companies yet to sign nationalization deals with the Bolivian government and would ink the deals at a ceremony just before midnight in the capital, La Paz.

The French company Total SA and the U.S.-based Vintage Petroleum signed nationalization deals on Friday.

Morales nationalized the South American country's oil and gas industry on May 1, giving foreign companies 180 days to sign new deals ceding majority control of their Bolivian operations or leave the country.

Iraq will invite China National Petroleum Corp. and other overseas companies to invest in oil fields to double daily production to 6 million barrels by 2012, the country's oil minister Hussain al-Shahristani said.

``We need foreign partners to help develop new fields,'' al- Shahristani said at a press conference today in Beijing. ``Iraq will significantly increase its oil production in the next few years and China will significantly raise its imports. That's why the two countries will need to work closely together.''

Iraq will increase its oil production to 3.5 million barrels a day by next year, with the capacity to export 2.4 million barrels a day, al-Shahristani said. The increased oil output will not be curtailed by the Organization of Petroleum Exporting Countries, or OPEC, because Iraq has been producing less than its quota for many years, he said.

``Our friends at OPEC understand Iraq needs to produce more oil quickly,'' he said. ``The general position is to allow Iraq to produce as much oil as quickly as possible.''

China imports about 40 percent of its oil. The world's fastest-growing major economy may consume 7 million barrels of oil a day this year, 6.4 percent more than in 2005, according to an October forecast by the International Energy Agency.

Need for Oil

The Asian nation needs more fuel to run power plants and feed its industries, prompting Chinese oil companies to look abroad for fields. Demand for oil in the world's fourth-largest economy has almost doubled in a decade, contributing to record prices.

The Iraqi parliament is poised to pass a law to regulate the country's oil and gas industry. All contracts signed during and after the collapse of Saddam Hussein's regime will have to be renegotiated under the terms of the new legislation, al- Shahristani said today.

At stake are an estimated $700 million of agreements signed in 2000 that gave China National Petroleum the right to develop the Al-Ahdab and Al-Qorna oil fields in southern Iraq.

``A committee has been convened to discuss this and they will commence work next month'' to renegotiate the terms of the contract to meet the requirements of the new law, al-Shahristani said today. ``The law allows participation but not control. The oil of Iraq belongs to the Iraqi people.''

Renegotiate Contracts

Agreements that China National Petroleum and China Petrochemical Corp., the nation's biggest oil companies, had to develop Iraqi oil fields were halted by the U.S. invasion in 2003 and the conflict that followed.

Iraq's government is increasing efforts to stop attacks on oil installations and ease companies' concerns over security, Thamir Ghadhban, an adviser to the Prime Minister, said Sept. 13.

Chinese companies plan to drill for oil in Iraq, which holds the world's third-largest proven oil reserves, China Oil News, China National Petroleum's online newsletter, reported Oct. 18, citing Dathar Al Khashab, general manager of Iraq's Midland Refineries Co.

China was approached after U.S. companies refused to work in Iraq, Al Khashab was cited as saying. Chinese companies have dismissed security threats, he said, without giving details.

China's government supports a return by the nation's oil companies to Iraq. Al-Shahristani said he met Chinese oil executives including the directors of China National Petroleum, China National Offshore Oil Corp. and China Petroleum and Chemical Corp. to discuss investments in Iraq.

Chinese Technology

``Chinese oil companies have the capital, capacity, technology and interest to invest in Iraq,'' he said today. ``They are willing to modify their facilities to work on Basra crude if Iraq can guarantee consistent supplies. We can very easily double our output and guarantee the supply.''

``We welcome cooperation between Chinese oil companies and other countries in the energy field,'' Zhang Yuqing, deputy director of the energy bureau at the National Development and Reform Commission, said on Oct. 18. ``If the Iraqi side seeks investment from Chinese enterprises, especially in oil field exploration and production, the Chinese government won't interfere in any of the activities of the oil companies.''

A $5 billion third-quarter profit from Chevron lifts the cumulative results of the five major oil companies that reported July through September earnings this week to more than $31.5 billion.

The industry benefited from oil prices that averaged more than $70 a barrel, as well as its ability to earn more money from gas production and sales.

Chevron's profits grew the fastest among its peer group, rising a whopping 40% from a year ago.

Chevron's results, released yesterday, marked the third time in the past year that its quarterly profits have hit a new high. The third-quarter figures were also far above analyst estimates, boosting Chevron shares by 18 cents to $67.68 on a day when the market benchmarks fell.

The boom times at Chevron and other major oil companies exasperated motorists and politicians as gasoline prices remained above $3 per gallon in many parts of the country before a recent decline eased some of the economic pain and frustration.

But the downturn in energy prices hasn't sapped the financial vigor of Chevron and its industry brethren.

Exxon Mobil, the only U.S. oil company larger than Chevron, posted a third-quarter profit of $10.5 billion - the second highest in its history.

Chevron's earnings of $5.02 billion, or $2.29 per share compared with profit of $3.59 billion, or $1.64 per share, at the same time last year.

Chevron boosted its earnings despite a slight decline in its revenue, which totaled $54.2 billion. That was down from $54.5 billion last year.

While more productive refineries contributed to Chevron's upturn, Oppenheimer analyst Fadel Gheit said Chevron reaped its biggest gains at the gasoline pumps. "They really cleaned up there," Gheit said.

Chevron surprised analysts with news on Oct. 27 that the San Ramon, Calif.-based oil giant's profit rose 40% during the third quarter, boosted by high oil prices, increased production, and improved profits at refineries.

The company announced net income of $5.0 billion, or $2.29 per share, for the third quarter of 2006, compared with $3.6 billion, or $1.64 per share, in the year-ago period. The mean analyst estimate had been for $2.03 earnings per share, according to the San Francisco research firm StarMine.

After the news, the stock gained 0.6% to $67.92 per share in Friday morning trading on the New York Stock Exchange. The shares were near their 52-week high of $68.50 reached earlier in the week.

Oil prices have fallen to around $60.63 per barrel as of Oct. 27, but they remained higher during much of the third quarter, when investors had feared potential supply disruptions such as hurricanes. Average U.S. prices for crude oil and natural gas liquids in the third quarter 2006 increased by about $9 per barrel from a year ago to $62.

Meanwhile Chevron's worldwide oil-equivalent production of 2.7 million barrels per day increased 152,000 barrels per day from the third quarter 2005. Production has been rising largely because of Chevron's August 2005 acquisition of Unocal, which had healthy reserves in regions such as the Gulf of Mexico and the Caspian Sea. That means easy comparisons now to previous quarters when Chevron didn't own Unocal.

Chevron is also benefiting from the comparison to Hurricane Katrina-ravaged 2005. For example, a Chevron refinery in Pascagoula, Mississippi had been down during the year ago third quarter after hurricane damage.

As utilization and profit margins improved at refineries during the third quarter, Chevron's downstream earnings of $831 million increased $692 million from the depressed level of the 2005 quarter.

Improved profits helped offset Chevron's decline in revenue, which fell to $54.21 billion from $54.46 billion during the third quarter 2005.

"Our company's focus on operational excellence and capital investment discipline continues to be key to our success," O'Reilly said in a press release.

Chevron isn't the only one in the industry to announce healthy profits. Irving (Tex.) oil major Exxon Mobil said Oct. 26 that it had third quarter net income of $10.49 billion, up from $9.920 billion during the same period of 2005, including a $1.620 billion gain related to the restructuring of Exxon's interest in the Dutch gas transportation business. On the same day, Royal Dutch Shell reported third quarter 2006 CCS earnings of $6.9 billion, compared to some $7.2 billion a year ago, when the company had divested $1.7 billion of pipeline assets held through Gasunie NV in the Netherlands.

Oil may rise next week as members of the Organization of Petroleum Exporting Countries cut production and cold weather spurs fuel demand in the northern U.S.

Twenty-six of 46 analysts, traders and brokers, or 57 percent, said prices will increase, according to a Bloomberg News survey. Six forecast a decline and 14 predicted little change. The percentage of people predicting a gain was the highest since July. Last week, 43 percent said oil would fall.

Yesterday, Abu Dhabi joined Saudi Arabia, OPEC's biggest producer, in reducing oil shipments to Asia. U.S. crude-oil inventories fell the most since July in the week ended Oct. 20, the Energy Department reported two days ago. Households and businesses turned on furnaces from Minneapolis to Philadelphia this week because of a cold snap.

``OPEC is regaining some credibility with the recent announcements by some members,'' said Michael Fitzpatrick, vice president for energy risk management at Fimat USA in New York. Lower imports and reports of reduced tanker loadings ``are also supporting the idea of an OPEC cut. The early arrival of cold weather is going to push up fuel demand.''

Crude oil for December delivery rose $1.03, or 1.7 percent, to $60.36 a barrel on the New York Mercantile Exchange in the first four days of this week. The contract traded at $60.41 at 8:27 a.m. Singapore time.

OPEC, which pumps about 40 percent of the world's oil, said on Oct. 20 that members would collectively cut output by 1.2 million barrels a day to prop up prices. Oil has declined about $18 a barrel from the record $78.40 reached on July 14.

OPEC Cuts

Abu Dhabi National Oil Co., the emirate's state-owned company, will cut crude-oil exports by as much as 5 percent in November. Abu Dhabi is the largest oil producer in the United Arab Emirates, which pumped 2.6 million barrels a day in September, according to Bloomberg estimates.

Saudi Aramco, the state oil company, on Oct. 21 notified Japanese refiners including Cosmo Oil Co. and Idemitsu Kosan Co. that it will cut exports as much as 8 percent from contracted volumes in November. Saudi Arabia is OPEC's largest producer and the world's biggest exporter.

OPEC's shipments of crude oil will decline 2 percent in the month to Nov. 11 from the preceding four weeks because of refinery maintenance, Halifax, England-based consultant Oil Movements said yesterday.

Roused From Complacency

``North American oil markets, which had gotten complacent on higher inventories, are now being roused by shrinking stocks and the onset of colder weather,'' said Gavin Wendt, senior resources analyst at Fat Prophets in Sydney. ``Supplies are still very tight and just one supply hiccup away from $65 to $70 a barrel once again.''

U.S. inventories of crude oil dropped 3.21 million barrels last week to 332.3 million, the Energy Department said Oct. 26.

U.S. gasoline supplies fell 2.76 million barrels to 207.4 million last week, the report showed. Stockpiles of distillate fuel, which includes heating oil and diesel, slipped 1.42 million barrels to 144 million. The report was expected to show that crude supplies rose as refiners shut units for maintenance.

Fuel consumption has been higher in the past four weeks than it was last year after Hurricanes Rita and Katrina damped demand in the U.S.

Gasoline use has averaged 9.3 million barrels a day in the period, a 3.3 percent increase from last year.

U.S. Demand

``Oil may reach as high as $63 a barrel next week, supported by growing demand in the U.S. for gasoline and other products,'' said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures Ltd. in Tokyo. ``Fuel inventories declined at a faster-than-expected pace, indicating solid demand growth.''

Lower-than-normal temperatures will cover most of the eastern two-thirds of the U.S. from Nov. 1 through Nov. 5, according to the National Weather Service. Home-heating use in the Northeast, where 80 percent of the nation's heating oil is burned, will be 11 percent above normal through Nov. 2, Weather Derivatives, a forecaster in Belton, Missouri, said yesterday.

Analysts who expected prices to be little changed or fall said that last week's oil supply drop was a one-time event and may not be repeated.

The Louisiana Offshore Oil Port, the biggest U.S. oil import terminal, was shut for one day, which may have cut deliveries. U.S. crude imports fell 9 percent last week to an average 9.49 million barrels a day, the lowest since March.

The survey has correctly predicted the direction of prices 52 percent of the time since it was introduced.

     Bloomberg's survey of oil analysts and traders, conducted
each Thursday, asks for an assessment of whether crude oil
futures are likely to rise, fall or remain neutral in the coming
week. The results were:

              RISE      NEUTRAL    FALL
               26         14        6

World production of crude oil may have already peaked, setting the stage for declining output that could lag demand, a top advocate of the "peak oil" theory said on Thursday.

Matthew Simmons, chairman of Simmons & Co. International, a Houston-based investment banking firm specializing in the energy sector, said U.S. government data showed that the world oil supply has declined through the first half of this year.

Energy Information Administration data showed world supply of crude oil has declined to 83.98 million barrels per day in the second quarter after hitting 84.35 million bpd in the fourth quarter of 2005.

"If you basically have another six to ten months of that decline lasting, then I think for certain we would look back and say, 'Guess what? We actually reached a sustainable peak in crude oil production in December 2005,'" Simmons said at a meeting of the United States of the the Association for the Study of Peak Oil and Gas.

The peak oil theory has detractors, who note technology can help extend the life of the world's oil reserves.

Simmons acknowledged his call may be premature, saying, "If that number turns around, that will be wrong."

TEMPERED VIEW

Other speakers at the conference took a more tempered view of the world's oil capacity, arguing that peak production is still a few years out.

"Conventional oil production is going to increase by a few million barrels a day between now and the period between 2010 and 2015," when it may peak, said Mike Rodgers, a partner at PFC Energy, an energy industry consulting company.

Advocates of the peak oil theory, however, said a decline in high oil prices was likely to lead to less pressure for oil companies to invest in production.

Rising demand for oil, stoked by the rapid economic development of China and India, have helped to drive oil prices to record highs. U.S. oil futures peaked above $78 in July, but have since eased to about $61 per barrel.

"If the supply and demand are such that we see declining oil prices, and given that the economy functioned pretty well through a period of high oil prices, the question is -- are policymakers going to lose focus on this problem?" Rodgers asked. "I would argue that they probably will."

It's hard to determine just how much oil is left in the world, since companies in different countries use varying standards to calculate their oil reserves, speakers said.

Major oil companies haven't raised the specter of peak supply with their shareholders.

One speaker said that could suggest their oil reserves are richer than many executives disclose, as a result of strict U.S. regulations on how public companies may estimate their reserves.

"We don't have data which allows us to study in detail the depletion of oil fields," said Jeremy Gilbert, managing director of Barrelmore Ltd. and a former top engineer at BP Plc. . "The industry itself does know more about the way things are behaving, wells are producing and it may be that if we had access to that data, we might refine some of our estimates."

The Energy Department said natural-gas inventories rose 19 billion cubic feet for the week ended Oct. 20.

Analysts at Global Insight expected a bigger climb of 35 billion. Total stocks now stand at 3.461 trillion cubic feet, up 333 billion cubic feet from the year-ago level, and 315 billion cubic feet above the five-year average, the government data said.

November natural gas rose 12.7 cents to a seven-week high of $7.82 per million British thermal units, bouncing off an earlier low of $7.58.

Oil industry giant Exxon Mobil's earnings rose to $10.49 billion in the third quarter, the second-largest quarterly profit ever recorded by a publicly traded U.S. company. Its shares briefly rose to a 52-week high.

The report Thursday comes as high crude prices this year have fueled record profits in the oil industry, triggering an outcry from consumers who were being asked to pay about $3 a gallon for gasoline in early August.

The largest quarterly profit ever was Exxon Mobil Corp.'s $10.71 billion profit in the fourth quarter of 2005.

The company may beat that next quarter, said Howard Silverblatt Standard & Poor's Senior Index Analyst. "Then in all likelihood they will be at that $40 billion mark for the year."

That would put the company on track for the highest annual profit ever by a U.S. company. Exxon Mobil holds that record with a 2005 profit of $36.1 billion.

Although crude oil prices began to decline toward the end of the third quarter, the average market price for crude held at around $70 a barrel in the period after peaking above $78 per barrel in July. Oil futures prices have recently traded near $61 a barrel, and gasoline prices have dropped to an average of about $2.43 a gallon.

Exxon Mobil, the world's biggest publicly traded oil company, said its net income amounted to $1.77 per share for the July-September period, up from $9.92 billion, or $1.58 per share, a year ago.

The results surpassed the expectations of Wall Street analysts. On average, analysts expected the company to earn $1.59 per share in the quarter.

Exxon Mobil shares rose 46 cents to $71.47 in morning trading on the New York Stock Exchange after rising to a new 52-week high of $72.33 earlier in the session.

Revenue fell to $99.59 billion from $100.72 billion from a year ago, which saw then-record oil prices because of hurricanes Katrina and Rita.

Still, Exxon's revenue for the three-month period was greater than the annual gross domestic product of some major oil producing nations, including the United Arab Emirates ($98.1 billion) and Kuwait ($52.76 billion), according to statistics maintained by the Central Intelligence Agency.

More than two-thirds of Exxon Mobil's profits come from oil and natural-gas production outside the U.S., with rising production in Africa, the Middle East and Russia consistently offsetting declining output in the United States, Canada and Europe.

Exxon Mobil said it pumped 7 percent more oil and natural gas than it did during the same quarter a year earlier. At the beginning of the year, some analysts had forecast a 5 percent growth.

Another major international oil company, Royal Dutch Shell PLC said its third-quarter profit fell 34 percent to $5.94 billion even as revenues rose 10 percent to $84.3 billion. But the Anglo-Dutch company's operating profit rose as higher oil prices outweighed worsening refining margins.

Earlier this week, ConocoPhillips reported its profit rose 2 percent to $3.88 billion in the third quarter while another major oil company, BP PLC, said its earnings fell 3.6 percent to $6.23 billion.

A fifth major oil company, Chevron Corp., is expected to report its results Friday.

High oil prices helped Irving, Texas-based Exxon Mobil realize earnings from its oil and gas drilling activities of $6.49 billion, up 13 percent from the prior year. The company also saw stronger earnings from its refining operations and gas stations, and profits at its chemicals segment more than doubled.

The company said its average sale price for crude oil in the U.S. during the quarter was $62.07 a barrel, compared to $56.97 a year earlier. Internationally, however, Exxon said the average sale price for oil was $65.64 compared to $58.24 a year ago. Natural gas sales in the U.S. were slightly lower in the U.S. but higher around the world.

Precision Drilling Trust reported its net profits fell to $139.7-million in the third quarter from nearly $1.4-billion last year, a period when the company booked a huge gain from the sale of assets.

Canada's largest oil and natural gas driller said Thursday it earned $1.11 a share for the quarter ended Sept. 30, compared with net profits of $11 a share in the same 2005 period.

The 2005 results, which came before Precision Drilling became a trust, were fattened by $1.38-billion in special gains from the sale of assets, mainly the company's international division.

In its latest quarter, revenues rose to $349.6-million from $300-million, but the company warned that its drilling business is being squeezed by lower natural gas prices, which has cut the number of gas wells being drilled in western Canada.

Meanwhile, the company said it generated record operating profits of $142.4-million for the third quarter, up from $111.9-million because of higher prices for contract drilling and well completion and production services.

“We can only do as well as our customers and we are working closely with them to ensure we respond to their needs in this market,” said Gene Stahl, president and chief operating officer of the trust.

“We are concentrating on the basics — customer focus, cost control and allocation of capital, and most importantly the welfare of our people.”

To close out the third quarter, the company noted that 1,784 new well licences were issued in September, the lowest industry total for that month since 2002.

In breaking down its operations, Precision said its drilling rig activity in October is averaging 48 per cent operating day utilization compared with 68 per cent in the 2005 fourth quarter.

While wet weather in October has contributed to the decline, the trust said the weakness in natural gas prices “has impacted the urgency with which customers are approaching their upcoming winter drilling programs.”

“In contrast to last year, there is more rig availability for the spot market and bidding for contracts has become more competitive,” the trust said.

“Natural gas accounts for about 70 per cent of Precision's activity in Canada and the drop in prices has slowed down drilling but the one-year forward strip on gas prices remains respectable,” added Mr. Stahl.

“What we are seeing is movement away from drilling shallow gas wells to deeper targets and a shift in our equipment utilization to our deeper rigs. It's a good example of how Precision can respond to the changing market.”

In China's latest big overseas oil deal, government conglomerate CITIC Group plans to buy Nations Energy Co.'s oil assets in Kazakhstan for $1.91 billion, the companies said Thursday.

The purchase, which requires approval by Calgary, Canada-based Nations Energy shareholders and the governments of Canada and Kazakhstan, would be China's third-largest acquisition of overseas oil assets.

Privately held Nations Energy's controlling shareholder, Ecolo Investments Ltd., has agreed to back CITIC's offer deal unless the company receives a superior one before the purchase is finalized, the companies said in a statement. Ecolo owns 76 percent of Nations Energy.

The deal is due to be completed in December, it said.

"We believe this is a fair price for Nations Energy shareholders and optionholders and the board of directors has unanimously agreed to recommend this transaction," David G. Wilson, a director for Nations Energy, said in the statement.

The purchase is only of Canada-based Nations Energy's biggest asset, the Karazhanbas field in Kazakhstan, which has proven oil reserves exceeding 340 million barrels, and current production of over 50,000 barrels of oil a day.

The company said it plans to divest itself from smaller assets it has in Azerbaijian, Indonesia and California.

CITIC, which has significant infrastructural investments in Central Asia, is planning to build a medium-sized refinery at Karazhanbas, said Zhang Jijing, a CITIC Group director.

"This is an excellent platform for CITIC's further diversified investment and business cooperation in Kazakhstan," Zhang said in the statement.

China has moved aggressively to buy up energy assets overseas to help fuel its booming economy and improve its energy security.

Last year, state-owned China National Petroleum eclipsed Russian rivals to acquire an oil field in Kazakhstan for $4.2 billion and built a pipeline to carry Kazakh crude to China.

In April, CNOOC, the country's offshore oil producer, acquired a $2.3 billion stake in a Nigerian offshore oil field.

China Petrochemical Corp., or Sinopec Group, in late June agreed to buy Anglo-Russian oil producer TNK-BP Holdings oil production unit Udmurtneft for $3.5 billion. But the deal called for it to sell 51 percent to Russian state oil company OAO Rosneft.

The Karazhanbas field was discovered in the 1970s and was in decline when Nations Energy acquired it in 1997 and drilled new wells, upgraded existing wells and added new production facilities, according to the company's Web site.

According to the Nations Energy's Web site, the company's chairman is Indonesian tycoon Hashim Djojohadikusumo, a son of Sumitro Djojohadikusumo, who was an economic advisor to former dictator Suharto, who stepped down in 1998 amid riots and protests after 32 years in power.

Nations Energy had been seeking a buyer for more than a year and reportedly unsuccessfully tried to sell itself to China National Petroleum Corp. and CNOOC Corp.

CITIC Group is one of China's biggest conglomerates. It was set up in Hong Kong in 1979 by former Vice President Rong Yiren as the government's main overseas investment arm.

CITIC Resources, a unit of CITIC Group with shares traded in Hong Kong, recently bought a 51 percent stake in an Indonesian field for $97.4 million.

Crude oil prices rose Thursday a day after jumping more than US$2 a barrel in response to a report that showed U.S. inventories dropped last week. OPEC's steps to cut production and attacks by Nigerian villagers on oil facilities also contributed to the increase.

Light, sweet crude for December delivery was up 25 cents to US$61.65 a barrel in Asian electronic trading on the New York Mercantile Exchange.

Though global oil supplies are still relatively ample and some skepticism remains about OPEC's willingness to go through with the 1.2 million barrel-a-day reduction it announced late last week, traders were betting on tightening supplies going into the winter, when fuel demand ramps up.

Heating oil futures rose nearly half a cent to $1.7435 a gallon (3.8 liters) on the Nymex, while gasoline futures dropped marginally to $1.5920 a gallon (3.8 liters).

Crude oil stockpiles fell by 3.3 million barrels to 332.3 million barrels in the week ending Oct. 20, the U.S. Energy Department's Energy Information Administration said Wednesday.

Distillate stocks, which include heating oil and diesel fuel, fell by 1.4 million barrels to 144 million barrels, and gasoline supplies dropped by 2.8 million barrels to 207.4 million barrels.

Crude stocks declined last week largely because of a 936,000-barrel decrease in imports from the previous week.

Oil prices had fallen to an 11-month low below US$57 a barrel Friday — even after the 11-member Organization of Petroleum Exporting Countries decided to reduce its daily production by a larger-than-anticipated amount of 1.2 million barrels — amid doubts about the cartel's ability to implement the decision to cut daily production.

But prices have bounced back up above US$60 a barrel after reports this week that so far, Saudi Arabia, the United Arab Emirates and Iran have begun informing customers that they are going through with the cuts, according to Dow Jones Newswires.

Meanwhile in Nigeria Wednesday, angry villagers stormed and seized three Royal Dutch Shell PLC oil platforms in the Niger Delta, forcing oil production to be shut down at each one, a spokesman for the oil company said.

Royal Dutch Shell officials declined to say how much oil had been cut off after the platforms were attacked. Attacks by armed militants in Nigeria have cut more than a quarter of the country's oil exports since the beginning of this year.

In other trading, natural gas futures rose 8.8 cents to $7.781 per thousand cubic feet. The contract has risen about US$2 in two weeks.

Oil prices jumped 4 percent to nearly $62 on Wednesday following a sharp drop in U.S. crude stockpiles last week and as members of producer group OPEC enforced output cuts.

In electronic trading, U.S. light crude hit a high of $61.72, adding another 32 cents after U.S. light crude settled at $61.40 a barrel, up $2.05, in the open-outcry session.

London Brent was $2.19 higher at $62.05 a barrel.

U.S. government data showed crude stocks in the world's top oil consumer fell 3.3 million barrels last week after bad weather shut the Louisiana Offshore Oil Port, the nation's largest oil import terminal, for three days last week.

The closure contributed to a steep drop in imports and countered analyst expectations that crude inventories had risen by 2.6 million barrels last week.

Distillate and gasoline stocks were also lower.

Adding support to prices, OPEC members are showing signs of enforcing a 1.2 million barrel per day production cut agreed last week at an emergency meeting in Qatar.

An Iranian official on Wednesday said Iran had informed customers it was cutting supplies by 176,000 barrels per day (bpd) in November.

U.S. crude had already risen 54 cents on Tuesday after Abu Dhabi's state oil firm told major customers it would cut crude exports by about 5 percent in November.

Leading OPEC producer Saudi Arabia is shouldering the greatest part of the cut and told clients earlier this week it would reduce November supplies.

OPEC DETERMINATION

A Nigerian official said its national oil company would maintain a 5 percent output cut in November after a voluntary 5 percent cut to October supplies.

Nigeria's production has also been disrupted by militant attacks and on Wednesday oil company sources said villagers had invaded four pumping stations in Nigeria's southern Delta.

Doubts OPEC would abide by its agreement helped to push U.S. crude down to $56.55 a barrel last week, the lowest level this year.

Some analysts still say OPEC has yet to prove its determination, but others said the producer group had gained experience in how to stave off any price collapse that it would now put to good use.

"They have learned a considerable amount in the last few years about micro-managing the market," said John Waterlow of Wood Mackenzie consultancy.

OPEC's success in shoring up the market could also depend on the weather.

Temperatures in the U.S. Northeast, the biggest oil consuming region in the world, will be colder than usual and higher heating demand was expected over the next five days, U.S. based private forecaster Meteorlogix said on Tuesday.

Private WSI Corp on Monday predicted warmer-than-normal Northeast temperatures in November, but said they would be followed by cooler weather in December and January.

The federal government has agreed to halt oil and natural gas lease sales off the Louisiana coast until environmental studies determine whether drilling degrades the coastline, the Department of the Interior announced Tuesday.

Gov. Kathleen Blanco sued the agency in July, trying to block it from selling leases to 381 tracts in the western Gulf of Mexico for future oil and gas exploration. The sale went ahead, with 62 companies submitting $340 million in high bids.

The agency said Tuesday it settled the lawsuit by requiring that companies planning to drill in those areas prepare a new environmental assessment, subject to review by Louisiana coastal officials.

The department also agreed to postpone a lease sale planned for March until it completes a new environmental impact study, taking into account the 217 square miles of Louisiana's coast that were washed away in Hurricanes Katrina and Rita last year.

Interior Secretary Dirk Kempthorne called Blanco to acknowledge the settlement on Tuesday, Blanco said.

Blanco called the settlement a breakthrough that will give Louisiana new power over its own coast. She said the settlement will lead to an influx of federal money because the environmental assessments are expected to show that drilling contributes to the steady erosion of Louisiana's marshy coast.

“I fully expect that an honest environmental assessment will lead to money” from the federal government, she said at a news conference.

Light, sweet crude was up $1.40 at $60.75 a barrel on the New York Mercantile Exchange following the decline in U.S. crude inventories last week. Meanwhile, sentiment has grown in recent days that OPEC production cuts might help shore up oil prices. On Friday, oil prices fell to their lows for the year.

Robert G. Smith, chairman and chief investment officer at Smith Affiliated Capital, contends the market will adjust to oil prices near current levels. "I think that $60 is the old $30 level. I think that we're going to back and forth around that level."

EnCana Corp., Canada's largest natural-gas producer, said third-quarter profit soared fivefold on higher output of the fuel and gains from an asset sale and derivatives contracts.

Net income rose to $1.36 billion, or $1.65 a share, from $266 million, or 30 cents, a year earlier, the Calgary-based company said in a statement today. Sales after royalty payments rose 31 percent to $3.92 billion.

EnCana lowered its 2006 gas-production forecast to 3.36 billion to 3.4 billion cubic feet a day from an earlier 3.42 billion to 3.56 billion. The reduction reflects reduced drilling because of higher costs and lower gas prices, said Jim Hall, a portfolio manager at Mawer Investment Management in Calgary.

``There were no big surprises, one way or the other, in quarter,'' said Hall, who oversees the equivalent of about $665 million including 500,000 EnCana shares. ``Gas prices are weaker and costs are up, so why would you go out and drill like crazy when there is no need to at this time?''

Chief Executive Officer Randy Eresman, 48, has sold assets to focus on natural-gas fields in North America and oil-sands projects in northern Alberta. EnCana and Houston-based ConocoPhillips on Oct. 5 agreed to spend $10.7 billion to produce and refine oil from oil sands.

Shares of EnCana fell 40 cents to $C53.35 at 9:39 a.m. on the Toronto Stock Exchange. The stock, which has 14 buy recommendations from analysts, 11 holds and three sells, has gained 1.5 percent this year.

Less Drilling

The results included gains of $255 million from the sale of a stake in a Brazilian offshore oil discovery and $285 million from the increased value of derivatives contacts used to lock in prices for gas and oil, EnCana said. In the second quarter of 2005, the hedging practice reduced earnings by $604 million.

Excluding such one-time items, EnCana earned 98 cents a share, exceeding the estimate of 95 cents from Andrew Potter, an analyst at UBS Securities LLC in Calgary. Higher-than-forecast gas prices and lower spending contributed to better-than-expected performance, Potter said in a note today.

EnCana said it expects to drill about 3,650 wells this year, down 15 percent from 2005. Gas futures traded in New York were 36 percent lower than a year earlier in the third quarter, averaging $6.182 per million British thermal units, down from a record $15.78 in December.

Third-quarter gas production rose 4.3 percent to an average of 3.36 billion cubic feet a day, and the fuel sold for an average of $5.75 per thousand cubic feet, down 21 percent from a year earlier.

Daily output of oil and natural-gas liquids was little changed at 150,565 barrels, compared with 150,457 a year earlier, and the liquids sold for $50.37 a barrel, a gain of 9.1 percent.

- Oil rose for a second day on Wednesday, pushing toward $60 a barrel after the United Arab Emirates' move to cut exports lent more credibility to OPEC's supply curbs while cold U.S. weather increased energy demand.

U.S. light crude rose 22 cents to $59.57 a barrel by 0243 GMT, after gaining 54 cents on Tuesday. London Brent was up 24 cents at $60.10 a barrel.

Abu Dhabi's state oil firm told major customers on Tuesday that it would cut crude exports by about 5 percent in November, following Saudi Arabia's lead and tempering skepticism on how OPEC's 1.2 million barrel per day (bpd) cut would materialize.

But prices are still only about 5 percent above the year's low of $56.55 a barrel, touched last week, and have not closed above $60 a barrel since Oct 5 as some traders still want to see proof of deeper cuts reflected in inventory levels.

"It shows some resolve on the part of OPEC producers, but it is going to take more than these two countries to restore the group's credibility," said Jim Ritterbusch, president at Ritterbusch and Associates in Galena, Illinois.

The UAE is due to reduce output by about 100,000 bpd as part of an OPEC deal last week to cut production by about 4.3 percent of its September output. Top oil exporter Saudi Arabia told customers at the weekend it was cutting November supply.

However, U.S. government inventory data due out later on Wednesday is likely to show a further rise in already high crude inventories as refinery turnarounds kept feedstock demand tepid, a Reuters poll of analysts showed .

Crude stocks probably rose by 2.6 million barrels. With a more than one-month sailing time from the Middle East to U.S. shores, it may be December before OPEC curbs begin to show.

Distillate stocks, including heating oil, which stood 15 percent above year-ago levels in the previous week, were seen falling by 1.1 million barrels, the survey found. Gasoline stocks likely dipped by 600,000 barrels.

"We've got surplus supplies of winter fuels, which despite concerns over a colder than expected winter, should keep up with demand through winter," Ritterbusch said.

Temperatures in the U.S. Northeast, the biggest oil consuming region in the world, will be colder than usual and see higher heating demand over the next five days, U.S. based private forecaster Meteorlogix said on Tuesday.

Private WSI Corp on Monday predicted warmer-than-normal Northeast temperatures in November followed by cooler weather in December and January, becoming the latest forecaster to predict average or below-average temperatures for the region.

The price of crude oil rose 54 cents Tuesday on the New York Mercantile Exchange to close at $59.35 per barrel.

Natural gas soared about 21 cents to end the session at $7.091 per million Btu, a 3-percent gain, MarketWatch said.

Heating oil rose 2.62 cents to settle at $1.6952 per gallon and gasoline increased 6.45 cents, or 4.4 percent, to end the day at $1.536 per gallon.

AAA said early Tuesday that the average U.S. retail gasoline price was $2.202 per gallon.

Exxon Mobil Corp., the world's largest publicly traded oil company, reports earnings for the fiscal third quarter on Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Even though oil prices began to slide at the quarter's end, a barrel of crude averaged about $70 during the period -- roughly in line with the second-quarter average and up from $63 a year ago.

On the retail side, gasoline prices climbed as high as $3 a gallon in early August, then fell to $2.43 a gallon by the end of September thanks to a surge in supply, particularly from overseas. That decline is expected to crunch margins and weigh heavily on oil companies' refining and marketing businesses.

Analysts expect the integrated oil companies, on average, to post weaker third-quarter earnings, compared with the 2005 quarter that saw a rally in oil and gasoline prices in the wake of hurricanes Rita and Katrina.

However, analysts generally expect Exxon Mobil to report more than 20 percent year-over-year earnings growth.

Over the past year, Exxon Mobil has set two corporate financial records: The company posted revenue of $100.72 billion in the third quarter last year -- the highest ever recorded by a U.S. public company in a single quarter. And in the fourth quarter, Exxon Mobil reported a $10.71 billion profit, record quarterly earnings for a U.S. public company.

BY THE NUMBERS: Analysts forecast earnings of $1.58 per share, according to a Thomson Financial poll.

ANALYST TAKE: JPMorgan analyst Jennifer Rowland expects Exxon Mobil to post a 23 percent jump in third-quarter profit compared with the prior year. But she expects results to come in roughly flat with the prior quarter, as lower gas prices tempered slightly higher crude prices.

Exxon Mobil has three major businesses: oil and gas production, refining and marketing -- which includes crude oil processing as well as sales at the company's chain of gas stations -- and chemicals. Rowland sees a 25 percent jump in oil and gas production earnings and a 54 percent increase in chemicals profit, offset by a 15 percent drop in profit from refining and marketing.

Refining margins crashed in September and dragged down the average for the quarter, said Lehman Brothers analyst Paul Y. Cheng. He expects more modest earnings growth from Exxon Mobil at 10 percent.

STOCK PERFORMANCE: Shares of Exxon Mobil climbed 9 percent over the course of the third quarter and are up about 20 percent since the start of the year. They traded recently just under $70 a share.

Oil rose above $59 a barrel on Tuesday after the United Arab Emirates told buyers it will cut exports next month, tempering scepticism that OPEC members will implement pledged cutbacks.

An industry source said the Abu Dhabi National Oil Company, the main UAE producer, told customers that it would cut all crude exports by about 5 percent. The UAE pumps about 2.6 million barrels per day.

"Over the weekend we had the Saudis informing of cuts and now the UAE is doing the same," said Olivier Jakob of Petromatrix. "We're getting confirmation that some of the cuts are for real."

U.S. crude was up 64 cents at $59.45 a barrel by 1515 GMT. It hit a 2006 low of $56.55 last week. London Brent rallied 65 cents to $59.86.

The UAE is due to reduce output by about 100,000 bpd as part of the Organization of the Petroleum Exporting Countries' deal last week to cut total production by 1.2 million bpd.

Top oil exporter Saudi Arabia told customers at the weekend it was cutting November supply.

But other members have yet to provide similar evidence. With oil still high by historical measures -- up from below $20 in January 2002 -- some doubt their commitment to cut.

"OPEC adherence remains to be seen," said Angus McPhail of investment company Alliance Trust.

SWIFT REBOUND UNLIKELY

Oil in New York has fallen from a record of $78.40 reached in July, pressured by rising inventories and easing concern about real and threatened supply disruptions.

Barclays Capital technical analysts said in a research note a swift price rebound was unlikely.

"Major damage has been done to the long-term uptrend and it is unlikely oil will make a rapid recovery. Expect weakness to eventually extend towards $55 but thereafter we would be looking to reinstate a strategic long position," they said.

Traders are also watching weather forecasts for regions such as the U.S. Northeast, the world's biggest heating oil consumer, for indications of winter fuel demand.

Private forecaster WSI Corp. on Monday predicted states in the Northeast should see warmer-than-normal temperatures in November before cooling down in December and January.

Analysts expect an increase in crude inventories, which are already well above seasonal norms, when U.S. weekly oil stocks data is published on Wednesday.

Crude stockpiles likely rose another 2.4 million barrels last week as refinery maintenance kept feedstock demand low, according to a preliminary Reuters poll of analysts.

Distillate stocks, which include heating oil, were seen falling by 1 million barrels and gasoline by 500,000 barrels.

Oil prices crept higher Tuesday as traders awaited fresh U.S. government data on domestic fuel inventories.

Crude futures had fallen during the past two trading sessions amid doubts about OPEC's ability to implement its recent decision to cut daily production by more than 1 million barrels. But some traders believe the cartel's intentions could nevertheless put a price-floor in place.

Light sweet crude for December delivery climbed 51 cents to $59.32 a barrel on the New York Mercantile Exchange. In London, December Brent crude futures on the ICE Futures exchange gained 53 cents to $59.74.

The oil market is "nearing the exhaustion of its immediate-term downtrend," said Citigroup analyst Tim Evans, who believes the market's early analysis of the OPEC move could shift.

But the London-based Centre for Global Energy Studies said in its latest research note that the Organization of Petroleum Exporting Countries failed to make public the individual starting points for cuts, which is a cause for concern.

"Venezuela and Iran have both consistently claimed much higher production levels, raising doubts that they will make any real cuts," the note said.

The Energy Information Administration is to issue weekly U.S. oil data Wednesday. Crude oil inventories are expected to grow for the fourth week in a row, by 2.7 million barrels, according to a survey of analysts by Dow Jones Newswires. Distillates stocks, which include heating oil, will likely fall by 1.6 million barrels to 143.8 million barrels, the survey showed.

In other Nymex trading, heating oil was up 2.2 cents to $1.691 a gallon, while gasoline futures rose almost 5 cents to $1.518 a gallon. Natural gas futures rose 10.2 cents to $6.983 per thousand cubic feet.

BP PLC reported a 3.6 percent drop in third-quarter profit on Tuesday because of lost production in Alaska, higher taxes in Britain and a slump in refining margins.

BP, which has experienced a run of difficulties in the United States, said net income for the three months ended Sept. 30 came to $6.23 billion, compared with $6.46 billion in the third quarter of 2005. Revenue in the third quarter climbed 4 percent to $70.7 billion.

Production for the period averaged 3.8 million barrels of oil equivalent per day, down 0.2 percent from the year-ago period and down 5 percent from the second quarter this year.

The results reflected London-based BP's woes in the United States, where several of its fields experienced outages and delays.

The company halved production at its Prudhoe Bay field in Alaska after severe pipeline corrosion and a small leak were uncovered. Production has now reached 400,000 barrels per day, double the low point but still below the previous average of 450,000 barrels per day.

It has also delayed the opening of its Thunder Horse platform in the Gulf of Mexico -- damaged by Hurricane Dennis last year -- from 2007 to the middle of 2008 because of equipment failures.

The platform is the largest in the Gulf and is expected to produce about 240,000 barrels of oil and 200 million cubic feet of natural gas per day.

As well as its U.S. production troubles, BP was faced with higher taxes in Britain's North Sea and lower refining margins.

"The trading environment reflected higher oil realizations and retail margins but lower refining margins and gas realizations compared to a year ago," said Chief Executive John Browne.

A 10-percentage-point rise in U.K. North Sea oil taxes was enforced for the first time in the third quarter. As a result, the company's effective tax rate was about 40 percent in the third quarter, compared to 36 percent in the second quarter.

The average price of a barrel of Brent oil, a key U.K. North Sea crude benchmark, rose 13 percent in the third quarter compared to the year-earlier period.

But average quarterly global refining margins were down 32 percent year-on-year after being boosted in the year-earlier period by the impact of hurricanes on prices.

Falling oil prices have further depressed BP's earnings, with light sweet crude trading below $59 a barrel Tuesday on the New York Mercantile Exchange -- down from the record $78.40 a barrel reached in July.

BP's adjusted net profit -- earnings before extraordinary items and excluding changes in the value of inventories -- was $4.5 billion. That was slightly better than the $4.74 billion expected by analysts.

Shares in the company rose 1 percent to 607 pence ($11.34) on the London Stock Exchange.

BP's value has fallen 20 percent since April as the company struggles to restore its profile in the United States following the Prudhoe Bay oil spill, the Thunder Horse platform delays, investigations into a March 2005 refinery explosion in Texas that killed 15 workers and allegations that it manipulated crude-oil and gasoline markets in the United States.

BP has already settled several lawsuits relating to the Texas City blast and has put aside $1.2 billion to resolve legal disputes. It also began a complete review of its global operations following the blast.

Browne has been ordered to appear in court to give a sworn deposition in one lawsuit brought by a woman whose parents were among those killed.

The company has declined to comment on a report by the British Broadcasting Corp. that a probe by the U.S. Chemical Safety Board into the explosion has attacked the company's safety standards. The BBC said that the report by the CSB, which is due for release early next year, alleges that the eight previous safety incidents at the facility were not property investigated, and that the right corrective actions were not taken.

Oil slipped further below $59 on Tuesday and analysts said prices may continue to drift until hard evidence emerged of the extent of OPEC production cuts.

Providing some support was another forecast for below average temperatures in the U.S. Northeast, the world's biggest heating oil consumer, from November.

U.S. crude was down 31 cents at $58.50 a barrel by 0850 GMT, after falling 52 cents on Monday.

Prices hit a 2006 low of $56.55 a barrel last week and stand 25 percent below a record high traded in July.

London Brent was down 33 cents at $58.88 a barrel.

Leading oil exporter Saudi Arabia told its customers at the weekend it was cutting November supplies as part of an OPEC deal to remove 1.2 million barrels per day from oversupplied markets.

But other members, notably Venezuela and Iran, have yet to provide similar evidence. With oil prices still high by historical measures, some doubt their commitment to cut.

"Visibility is low for the time being, leaving us waiting for IEA data in early December to judge whether cuts have been enacted and leaving ample scope for speculation on OPEC cohesion," Citigroup said in a research note.

Gerard Burg, a commodities analyst at National Australia Bank, said fuel stock levels in consumer countries were key to price direction.

"Until we see the effects of the cut on stockpile levels we might not see any response... It may be a few weeks before anything happens (to stocks)," he said.

Barclays Capital technical analysts said in a research note a swift price rebound was unlikely.

"Major damage has been done to the long-term uptrend and it is unlikely oil will make a rapid recovery. Expect weakness to eventually extend towards $55 but thereafter we would be looking to reinstate a strategic long position," they said.

COLD U.S. WINTER?

Private forecaster WSI Corp. predicted below average temperatures in the U.S. Northeast from November to January. Others have made similar forecasts, pointing to higher fuel demand after a mild season last year.

U.S. weekly oil stocks data will be published on Wednesday.

Crude oil stocks, already well above seasonal norms, likely rose another 2.4 million barrels last week as refinery maintenance kept feedstock demand low, according to a preliminary Reuters poll of analysts.

Distillate stocks, which include heating oil, were seen falling by 1 million barrels and gasoline by 500,000 barrels.

Royal Dutch Shell Plc offered C$7.7 billion ($6.8 billion) for the 22 percent of a Canadian venture it doesn't own to increase production from oil sands as violence curbs Nigerian supplies and fields mature in the North Sea.

Shell will offer C$40 a share for the Shell Canada Ltd. stake, The Hague-based company said today in a PR Newswire statement. That's 22 percent more than the closing price of Shell Canada's stock on the final day of trading last week.

Chief Executive Officer Jeroen van der Veer needs access to reserves to counter shut production in Nigeria because of militant attacks and aging fields in the North Sea and Gulf of Mexico. As much as C$125 billion may be spent in the next decade to almost triple output from Canada's oil sands, according to the National Energy Board. Reserves there may be second only to Saudi Arabia.

``It's a sensible deal to do at this time,'' said Jason Kenney, an oil equity analyst at ING Wholesale Bank in Edinburgh, who rates Shell ``hold.'' ``The timing is indicative that Royal Dutch Shell sees the oil price stabilizing at current levels.''

Shell Canada shares trading in Germany jumped to the equivalent of C$40.38. Shell A shares in London lost 14 pence, or 0.8 percent, to 1,752 pence.

Oil prices in New York have jumped 81 percent since 2003, boosting the appeal of projects such as oil sands. Oil today traded at $58.70 a barrel, down 25 percent since a July record.

Viable at $30

Shell Canada, Canada's fourth-largest oil company, earlier this month said oil-sands projects would remain viable should crude prices fall to $30 a barrel. Shell's oil sands project is in a region known as the Athabasca in northeastern Alberta, where oil-laden sands are strip mined and then processed with heat and solvents to extract the tar-like crude.

Shell Canada said on July 28 that costs to expand the Athabasca project may surge 75 percent to as much as C$12.8 billion. The budget for the expansion had already risen to C$7.3 billion in August 2005 from an original estimate of C$4 billion.

Royal Dutch Shell has struggled with cost overruns on other projects, including Russia's Sakhalin 2 venture, where it owns a majority. Shell last year said costs for the second phase of the venture doubled to $20 billion, prompting a review by the government of President Vladimir Putin and threats to cancel construction permits.

Cost Overruns

Shell in July said it will make fuels from Qatari natural gas in a project that may cost as much as $18 billion, triple earlier estimates.

The company is ``suffering cost overruns elsewhere in its portfolio,'' Kenney said today by telephone.

The Athabasca venture consists of a mine in northern Alberta and a processing plant that upgrades bitumen, an extra-heavy crude extracted from the tar-like deposits, into synthetic crude. The synthetic crude can be refined into gasoline, diesel and other fuels.

The company has long-term plans to produce as much as 550,000 barrels a day at the Athabasca project, Shell Canada said in July. The joint venture currently is designed to produce 155,000 barrels a day. Chevron Corp. and Western Oil Sands Inc. each own 20 percent of the project.

The buyout proposal ``is a further step in simplifying the group structure'' after the company merged its Dutch and U.K. boards last year, Shell said today. Owning 100 percent of Shell Canada will give it ``full access to the group's financing capabilities,'' the statement said.

Seeks Board Support

The buyout will allow the Shell group to gain more control over the costs of expanding its oilsands project, said ING's Kenney.

Shell said it wants support from the Shell Canada board, which will make its own valuation of the holding. ``The group reserves the right, however, not to proceed with the making of an offer if it is unable to obtain this support,'' the statement said.

The oil sands contain an estimated 175 billion barrels of recoverable oil, second only to Saudi Arabia's 259 billion barrels, according to the Canadian Association of Petroleum Producers.

Shell's announcement in January 2004 that it had misstated its reserves hurt the company's reputation with investors and led to the ouster of then-Chairman Philip Watts. The company overstated 2002 reserves by 41 percent.

World oil prices fell Monday amid market doubts about a pledge by the Organization of Petroleum Exporting Countries to curtail production, with many analysts believing the cartel will have difficulty fully enforcing a cut.

Light sweet crude for December delivery fell 52 cents to settle at $58.81 a barrel on the New York Mercantile Exchange. In London, Brent crude futures on the ICE Futures exchange dropped 76 cents to settle at $58.92.

Though OPEC's Friday decision to cut output by 1.2 million barrels a day to reverse a three-month price slide initially triggered a rise in prices, market analysts were mindful that oil prices are still twice as high as they were three years ago and that oil producing nations still have plenty of incentive to pump away.

"This last OPEC cut was misbegotten," market watcher Societe Generale said Monday in a report.

Oil prices have fallen by roughly $20 since a mid-July peak above $78 a barrel due to rising supplies, weakening demand growth and a milder-than-anticipated hurricane season.

Vienna-based analyst group PVM Oil Associates also said the Iraqi oil minister, Hussein Al-Shahristani, caused a stir this weekend by announcing that his country's oil production reached 2.86 million barrels a day this month, effectively passing prewar levels.

"However, these statements should be handled with care as they might rather be seen as an attempt to distract from the current political situation," PVM said, adding that according to its own data, Iraq's oil production this month would amount to 2 million barrels a day.

Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures, said "there's a lot of crude oil available in the market. Refiners would like to take less crude oil ... also, they're reducing refining operations."

He said that without fresh momentum, prices could fall further toward the mid-$50 range in coming months.

OPEC has a history of producing above its official quota when prices are high and analysts are therefore reluctant to accept the cartel's intentions at face value.

Moreover, many analysts see OPEC's action as proof that the group responsible for supplying more than a third of the world's oil is increasingly worried about slowing demand growth and burgeoning supplies from non-OPEC sources.

Oil prices have tumbled in recent months due to rising global supplies, a weaker-than-anticipated hurricane season and expectations for slower economic growth.

Nymex heating oil futures fell 1.1 cent to $1.669 a gallon, while gasoline futures slid less than a cent to settle at $1.4715 a gallon. Natural gas futures declined by 36 cents to settle at $6.881 per 1,000 cubic feet.

BP Production Woes and Lower Crude Oil Prices Expected to Curb 3Q Revenue

A pipeline leak in Alaska, production outages in the Gulf of Mexico, allegations of market manipulation, an investigation and lawsuits into a deadly refinery blast -- there seems to be no end to BP PLC's troubles in the United States.

Those woes, combined with a drop in crude oil prices, are expected to be reflected in the London-based oil company's quarterly earnings report on Tuesday.

Analysts expect BP, one of the world's largest oil companies, to report an adjusted net profit of $4.74 billion for the three months ended Sept. 30, down 11 percent from $5.33 billion in the same quarter a year ago.

The company said earlier this month that oil and gas production fell 0.6 percent to 3.824 million barrels a day in the third quarter -- the fifth consecutive quarterly drop -- as production cuts at its Alaskan oil fields following a pipeline leak in August added to existing problems in the Gulf of Mexico.

BP also reported lower refining margins, a drop in the price it gets paid for gas, a higher tax burden and lower production at its joint venture in Russia.

The third-quarter result, which BP said reflected "the impact of divestments, maintenance and operational downtime," was also 218,000 barrels below the level reached in the second quarter of this year and underlined the problems facing the company.

BP's value has fallen 20 percent since April following the Alaskan spill of some 267,000 gallons of oil at Prudhoe Bay, investigations into the Texas City refinery explosion, delays to the opening of the key Thunder Horse platform in the Gulf of Mexico following hurricane damage, and allegations that it manipulated crude-oil and gasoline markets in the United States.

Its shares were barely changed in London trading Monday ahead of the results announcement, down just 0.1 percent to close at 601.5 pence ($11.26).

Societe Generale, which rates BP at sell, says the company's quarterly profit drop will be biggest among European oil majors.

Prudential Equity Group said it was lowering its full year earnings per share estimate for the company to $6.43 from $6.52 to reflect lower production and international refining margins.

BP has already settled several lawsuits relating to the March 2005 Texas City blast that killed 15 workers and has put aside $1.2 billion to resolve legal disputes.

Chief Executive John Brown has been ordered to appear in court to give a sworn deposition in one lawsuit brought by a woman whose parents were among those killed.

BP also began a complete review of its global operations following the blast.

The company has declined to comment on a report by the British Broadcasting Corp. that a probe by the U.S. Chemical Safety Board into the explosion has attacked the company's safety standards. The BBC said that the report by the CSB, which is due for release early next year, alleges that the eight previous safety incidents at the facility were not property investigated, and that the right corrective actions were not taken.

Even as BP prepared to release its earnings, the bad news out of the United States continued -- it revealed Monday that it had reported an emission of nitrogen oxide because of a heater leak from its oil refinery in Carson, near Los Angeles, to California public safety agencies.

The Carson refinery, which processes around 268,000 barrels of crude oil a day, has reported three other emissions events in the past month.

Falling oil prices have further depressed BP shares, with crude hitting a seven-month low below $59 a barrel Monday -- down from a record $78.40 a barrel reached in July. Oil prices have eased as an end to fighting in Lebanon reduced concerns about Middle East supplies and the U.S. hurricane season left production intact.

Shares of Premier Oil Plc, a U.K. company exploring for crude in the North Sea, Asia and Africa, surged to a record after the company said it got a takeover offer from an unidentified suitor.

Discussions are at an ``extremely early stage'' and a formal offer may not be made, Premier said today in a Regulatory News Service statement. The shares advanced 95 pence, or 7.9 percent, their biggest one-day gain since March 2003, to close at a record-high 1,300 pence today in London. That values the company at 1.06 billion pounds ($1.99 billion).

Oil prices in New York have climbed 81 percent since 2003, boosting the appeal of oil companies. Oil today traded at $58.84 a barrel, down about 25 percent since a July record. London- based Premier, founded in 1934 as the Caribbean Oil Co., produced 33,521 barrels of oil equivalent in the first half, 3.6 percent less than in a year earlier, it said in September.

``Premier has a good, steady base of production with immediate access to high-impact exploration offshore west Africa,'' Tony Alves, an analyst at KBC Peel Hunt Ltd. who rates the stock ``hold,'' said in an interview. He would be ``surprised'' if the bidder is a western company and ``would look east for possible names.''

A purchase at the current share price would be ``too high,'' he added.

The company has operations in Vietnam, Egypt, Indonesia, India, U.K., Norway, Mauritania, Guinea Bissau, Pakistan and the Philippines.

Crude oil was little changed after dropping 1.9 percent on Oct. 20 in New York amid speculation the Organization of Petroleum Exporting Countries will fail to cut production by as much as planned.

Oil-price gains soon after OPEC's Oct. 19 accord to cut output have been wiped out because of speculation compliance by members such as Saudi Arabia and Kuwait won't be enough to pare global inventories. U.S. crude supplies are 14 percent higher than their five-year average. Over the weekend, Saudi Arabia told Japanese refiners to expect lower shipments in November.

``It may be enough to stop the fall but it's not enough to cause a rebound,'' said Anthony Nunan, assistant general manager of international petroleum business at Mitsubishi Corp. in Tokyo. ``Even though what Saudi is doing should be considered bullish, I think people fell we still need some drawdown in inventories before we can really get bullish.''

Crude oil for December delivery fell as much as $1.07, or 1.8 percent, to $58.26 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was 2 cents lower at $59.31 at 1:07 p.m. Singapore time.

On Oct. 20, the December contract fell $1.17, or 1.9 percent, to $59.33 a barrel. The November contract, which expired at the close on Friday, fell 2.9 percent to $56.82, the first time this year that the monthly contract nearest to delivery closed below $57 a barrel.

Twenty-one of 49 analysts, traders and brokers in a weekly Bloomberg News survey said prices will decline this week. Fourteen forecast an increase and 14 predicted little changed. The survey was carried out before OPEC formally announced production cuts.

Brent Falls

In London, Brent crude oil for December settlement fell as much as 45 cents, or 0.8 percent, to $59.23 a barrel on the ICE Futures exchange. It was at $59.57 at 1:23 p.m. Singapore time.

The 4.4 percent reduction starting Nov. 1 will be based on how much members were pumping last month, rather than quotas, United Arab Emirates Oil Minister Mohamed al-Hamli, who will become OPEC president in 2007, said Oct. 20 after members met in Doha, Qatar.

The 10 OPEC members with quotas produced 27.6 million barrels a day last month, lower than the combined quotas of 28 million barrels a day. Nigeria, Iran, Venezuela and Indonesia now pump less oil than their official allocations or quotas, according to Bloomberg estimates. Algeria, Libya, Saudi Arabia and the United Arab Emirates are pumping more.

``There are doubts about the ability of OPEC to really stick to the cuts that they've stated,'' said Andrew Harrington, a commodities analyst at Australia & New Zealand Banking Group Ltd. in Sydney. ``The announced cut was greater than expected but it still didn't seem to scare the market very much. We're likely to see more softness.''

Stockpiles Gain

U.S. crude oil inventories surged 5.02 million barrels to 335.6 million in the week ended Oct. 13, the Energy Department reported Oct. 18, the biggest increase since March.

Supplies of distillate fuel, a category that includes diesel and heating oil, and gasoline fell in the week. U.S. refineries had their lowest operating rate since April as companies shut units for maintenance.

``We are likely to see more of what happened last week, with crude inventories up and products down,'' Harrington said.

The U.S. gasoline pump price fell eight cents in the past two weeks to $2.20 a gallon, the lowest this year, as crude oil prices declined, Trilby Lundberg said, citing her survey of about 7,000 filling stations nationwide.

Prices for regular gasoline have declined 82.5 cents from a record average $3.025 a gallon reached in mid-August as lower demand following the end of the summer driving season has kept inventories above average. Wholesale gasoline futures in New York fell to the lowest since February on Oct. 17.

Heating oil for November fell as much as 1.85 cents, or 1.1 percent, to $1.6615 a gallon in after-hours trading on the New York Mercantile Exchange. It was at $1.6796 a gallon at 12:09 p.m. Singapore time.

Gasoline futures rose 0.13 cents, or 0.1 percent, to $1.4685 a gallon at 10:37 a.m. Singapore time.

Halliburton Announces Third Quarter Earnings of $0.58 Per Diluted Share
Sunday October 22, 5:35 pm ET

HOUSTON--(BUSINESS WIRE)--Halliburton announced today that income from continuing operations in the third quarter of 2006 was $615 million, or $0.58 per diluted share. This compares to income from continuing operations of $492 million, or $0.47 per diluted share, in the third quarter of 2005. Net income in the third quarter of 2006 included a $4 million after-tax loss related to discontinued operations, while net income in the third quarter of 2005 included after-tax income from discontinued operations of $7 million.

Consolidated revenue in the third quarter of 2006 was $5.8 billion, up 19% from the third quarter of 2005. This increase was largely attributable to higher activity in the Energy Services Group, particularly in North America.

Consolidated operating income was $968 million in the third quarter of 2006 compared to $680 million in the third quarter of 2005. The Energy Services Group (ESG) benefited from increased customer activity and pricing gains. Operating margins at ESG were their highest ever, at 26.7%. Operating income for the third quarter of 2005 included $85 million in income on the sale by KBR of an equity investment in a toll road.

"This was an exceptional quarter for Halliburton. The Energy Services Group improved on its impressive second quarter results, growing revenue 9 percent sequentially, and again setting new records for revenue, operating income, and operating margins. I'm also pleased with the quarterly performance of KBR, which posted a 7.5 percent operating margin in the Energy and Chemicals segment," said Dave Lesar, chairman, president, and chief executive officer of Halliburton.

Russia does not intend to reduce its oil production following OPEC's decision to cut its quota to 1.2 million barrels per day, according to Andrei Dementyev, Russian deputy industry and energy minister.

"We are not planning to reduce [oil production]. We are increasing oil production under our strategy, and diversifying our markets and supplies," Andrei Dementyev said.

A Consultative Meeting of the Conference of the Organization of Petroleum Exporting Countries (OPEC) was held in Doha, Qatar, October 19-20, where it was decided to reduce production by 1.2 million barrels per day, from the current production of about 27.5 million barrels per day to 26.3 million barrels per day, effective November 1, 2006.

The price of the OPEC basket of 11 crudes stood October 19 at $54.56 per barrel, the organization said Thursday.

Russia's oil production grew 2.4% in the first eight months of 2006, year-on-year, to 318 million metric tons (2.34 billion bbl), the Federal State Statistic Service said October 16.

"We are not going to follow anyone's lead," Dementyev said. "Russia is not a unified oil company, and it is not an OPEC member."

The number of rigs actively exploring for oil and natural gas in the United States increased by 11 this week to 1,739.

Of the rigs running nationwide, 1,442 were exploring for natural gas and 291 for oil, Houston-based Baker Hughes Inc. reported Friday. Baker Hughes listed six as miscellaneous.

A year ago, the rig count stood at 1,474.

Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.

Of the major oil- and gas-producing states, Oklahoma gained eight rigs, Colorado gained three and California gained one. Wyoming lost seven rigs and Louisiana lost three. Alaska, New Mexico and Texas were unchanged.