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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Public holidays across Europe meant trading volumes were very thin.

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

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

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

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

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

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

OPEC CUTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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