Price of Crude Oil Slides $1 a Barrel As Demand Eases

By JANE WARDELL Associated Press writer

Crude oil prices slid more than $1 a barrel Tuesday in a sign that market jitters have eased with the summer driving season over and the winter heating season yet to begin, analysts said.

Light sweet crude for November delivery fell $1.57 to settle at $63.90 on the New York Mercantile Exchange.

Gasoline futures fell 4.65 cents to close at $2.0157 a gallon, while heating oil futures fell 3.12 cents to $2.0497 per gallon.

In London, November Brent futures dropped $1.58 to settle at $61.22 a barrel on the International Petroleum Exchange.

“Demand growth is in the process of slowing,” said James Cordier, president of Liberty Trading in Tampa, Fla. “Everyone knows we’re in a seasonal soft patch.”

The psychology of the market may also be shifting as a result of the Bush administration’s recent requests of Americans to conserve fuel.

And on Monday, U.S. Energy Secretary Samuel Bodman sought to address the supply side of the equation by saying the government was “prepared to do what is necessary with strategic reserves” — a response to a question about the U.S. Northeast emergency heating oil inventory.

The Paris-based International Energy Agency has said it would consider releasing additional petroleum supplies to help the United States avert an energy crisis in the aftermath of back-to-back hurricanes that crimped oil and natural gas production in the Gulf of Mexico.

The U.S. Minerals Management Service said Tuesday that 90 percent of the region’s daily oil production remains shut, while 72 percent of its daily natural gas output is down.

Analysts are waiting for a U.S. petroleum inventories report due later in the week for fuller details of the impact of hurricanes Katrina and Rita.

One big issue, analysts say, is the loss of Gulf Coast refining capacity needed to manufacture gasoline, heating oil and jet fuel. Twelve refineries accounting for about 3 million barrels a day, or 18 percent of U.S. refining capacity, remain shut in the aftermath of Katrina and Rita.

Another concern is the potential for a prolonged loss of natural gas output. Unlike oil, the U.S. government does not have an emergency stockpile of natural gas and the country does not have the infrastructure in place to substantially increase imports.

Natural gas for November delivery rose 20.7 cents to $14.224 per 1,000 cubic feet.