NEW YORK -- Crude oil and gasoline prices slipped Friday, as traders' fears of further damage to the nation's oil production eased after Tropical Storm Ophelia veered away from Florida's coast.
Light, sweet crude for October delivery fell 41 cents to settle at $64.08, after reaching as high as $65.35 and as low as $63.55 in jumpy trading on the New York Mercantile Exchange. Nymex crude is more than $6 off its peak of $70.85 a barrel briefly reached during the day on Aug. 30, but is still almost 50 percent higher than a year ago.
Gasoline futures slipped more than 7 cents to settle at $1.9597 a gallon, after dropping as low as $1.9350, while heating oil fell more than 3 cents to settle at $1.8965 a gallon. At the pump, however, drivers were paying more than $3 a gallon, on average.
Brent crude fell 24 cents to settle at $62.84 on London's International Petroleum Exchange.
"There's a little more optimism that things are getting better," said Phil Flynn, analyst at Alaron Trading Corp. in Chicago. He added that traders are reassured about oil supply as crude imports stream in, and are betting that Tropical Storm Ophelia off Florida's coast won't disrupt production.
On Friday, Ophelia drifted away from Florida's northeast coast, and its top sustained winds had dropped to 65 mph.
However, forecasters warned the storm could still loop back toward the peninsula, Georgia or the Carolinas, and may return to hurricane strength -- 74 mph sustained winds -- by late Friday. Ophelia briefly had been upgraded to a hurricane Thursday when its winds reached 75 mph.
Also Friday, the International Energy Agency lowered its projected growth in oil demand this year and next -- but only in part due to Katrina, saying high prices were choking demand even before the storm hit. The Paris-based agency said daily world oil demand this year would grow by 1.35 million barrels to 83.48 million barrels -- 250,000 barrels less than its previous forecast. The energy watchdog also cut its estimate of demand growth by the same amount for next year to 85.25 million barrels a day.
Flynn said most oil traders do not typically put much stock in IEA reports, but in these skittish times, "any news story is likely to make them jump over the edge."
Meanwhile, damage reports from Hurricane Katrina filtered in, with U.S. Energy Secretary Sam Bodman saying at least four refineries in the U.S. Gulf Coast would remain off-line for months.
The Minerals Management Service said about 60 percent of oil production in the Gulf and 38 percent of gasoline production remained closed off, as of midday Friday.
The U.S. Energy Department said Thursday that crude oil inventories fell 6.4 million barrels in the week ending Sept. 2. At 315 million barrels, crude inventories are still 13 percent above year-ago levels.
Gasoline inventories dropped 4.3 million barrels to 190.1 million, 9 percent lower than a year ago. Distillate fuel inventories -- which include heating oil -- fell 800,000 barrels to 134.4 million, 3 percent higher than a year ago.
Analysts had already expected drops in petroleum stocks across the board after Katrina sliced through key U.S. energy infrastructure and import terminals, but the decline in gasoline was less than expected.
"Here's the concern," said Purvin & Gertz analyst Victor Shum. "We're heading into the last quarter of the year, the winter peak demand season. Energy costs for consumers and industries certainly will be high."
The Energy Information Administration, a division of the U.S. Energy Department, revised figures for winter following Katrina and said petroleum will cost 34 percent more than a year ago, natural gas will be 52 percent more expensive and electricity will likely cost Americans 11 percent more.
"For all of 2005, energy expenditures in the United States are expected to be $1.08 trillion, approximately 24 percent above the 2004 level," the EIA said in its short-term energy outlook.
"This level of expenditures represents approximately 8.7 percent of annual gross domestic product, compared to 6.2 percent as recently as 2002, and is the highest percentage since 1985 at 10.4 percent," the report said.
Winter is traditionally a peak season for distillates, which group heating oil, jet fuel and diesel. High demand is a concern for markets as there is limited excess capacity to deal with an unplanned production outage.
First Published: September 10, 2005, 4:00 a.m.
