Oil Boom Profits

Crude oil fell 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 inventories.

Higher-than-usual temperatures are expected in most of the U.S. from Nov. 7 until Nov. 13, the National Weather Service reported. U.S. crude inventories, already 12 percent above their five-year average, probably rose 2.7 million barrels last week, according to a Bloomberg News survey of nine analysts.

The price of oil has dropped because of ``the new weather forecasts, which foresee warmer temperatures,'' said Tobias Merath, commodity strategist at Credit Suisse in Zurich. ``Many analysts expect higher stockpiles.''

Crude oil for December delivery dropped as much as 61 cents, or 1.1 percent, to $57.75 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract traded at $57.93 at 1:05 p.m. London time. Yesterday, the contract fell $2.39, or 3.9 percent, to $58.36, the biggest one-day decline since Aug. 17, 2005.

Brent crude oil for December settlement declined 35 cents to $58.33 a barrel on the ICE Futures exchange.

There will be ``a rapid warm-up in most areas as mild Pacific air'' causes cold air to be ``locked up well north of the Canadian border,'' the U.S. National Weather Service said yesterday in a report posted on its Web site.

Oil prices have fallen about 26 percent from a record $78.40 a barrel in New York reached on July 14, when fighting between Israel and Hezbollah militants in Lebanon raised the possibility of Middle East supply disruptions. Since then, rising inventories and a calm U.S. hurricane season have caused prices to drop.

Bosporus Straits

The oil price was supported today when OPEC Secretary General Mohammed Barkindo said the group may agree to a further cut in crude production. At the same time, Turkey's Bosporus Straits, one of the world's busiest waterways, was closed to large ships headed north because of strong winds, said Emre Tungu, a ship agent at Master Maritime Agencies Inc. in Istanbul.

The Bosporus, which connects the Black Sea and the Mediterranean Sea, shut at 9:30 a.m. Istanbul time to vessels more than 200 meters (656 feet) long. Docking operations at the Sheskharis oil terminal, part of Russia's largest Black Sea port of Novorossiisk, were also hampered by strong winds, Seatrade Maritime Ltd. wrote in a report.

OPEC Vigilance

The Organization of Petroleum Exporting Countries, the supplier of 40 percent of the world's oil, agreed on Oct. 20 to lower output by 1.2 million barrels a day, starting tomorrow. OPEC will decide at a meeting on Dec. 14 in Abuja, Nigeria, whether to cut production again to try to boost the price of oil.

The group may reduce output in 2007 as demand weakens, Barkindo said today. The 11 members of OPEC expect to produce 28.1 million barrels a day of crude next year, down 5.7 percent, or 1.6 million barrels a day, from last month's output.

There is a ``market oversupply'' because countries that aren't part of OPEC are pumping more oil while demand remains ``far from robust,'' he said.

The OPEC crude oil basket price fell 66 cents to $54.87 a barrel yesterday, the group said in an e-mail. The daily price index is a weighted average of 11 crude blends produced by OPEC nations.

``There are more and more voices to call another cut in December, and we think this might be possible,'' Credit Suisse's Merath said. ``As stockpiles are high, it's not sure whether a production cut of 1.2 million barrels per day is enough to stabilize the oil price.''

High Inventories

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. inventories 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.

Supplies of distillate fuel, a category that includes heating oil and diesel, fell 1.4 million barrels last week, according to the median of nine analysts' responses to a Bloomberg survey. Gasoline stockpiles probably slipped 1 million barrels.

The U.S. Energy Department is scheduled to release its weekly report on petroleum inventories tomorrow at 10:30 a.m. in Washington.

Shares of integrated oil companies dropped Tuesday, as crude prices slid more than $2 per barrel.

The overall Amex Oil Index fell 1.6 percent, with all 13 of its component stocks marking declines. A barrel of crude dropped $2.35 to settle at $58.40 a barrel on the New York Mercantile Exchange,

Traders said doubts about the Organization of Petroleum Exporting Countries' ability to implement a production cut of 1.2 million barrels a day weighed on prices, and supply data due out later this week is expected to show rising inventories of crude.

Among the index's sharpest decliners, ConocoPhillips lost $1.39, or 2.3 percent, to $59.80 on the New York Stock Exchange.

Other big integrated competitors showed milder percentage declines. Chevron Corp. lost $1.29 to $66.39, and Exxon Mobil Corp. slipped 62 cents to $70.84, both on the NYSE.

Other index decliners included Hess Corp., down $2.28, or 5.3 percent, to $41.03, and Occidental Petroleum Corp., down $1.35, or 2.8 percent, to $46.33, both on the NYSE.

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.

Canadian Natural Resources Ltd. , one of North America's largest independent oil and gas companies, could become a takeover target of a major oil company because of its large presence in the Alberta oil sands, one of the world's most promising energy regions, according to Barron's.

But John Langille, a Canadian Natural vice chairman, said selling isn't on the horizon.

"We want to continue to grow our company into a very strong independent," he told Barron's in the newspaper's Oct. 30 edition. "Selling to someone else is not part of our game plan."

Through acquisitions Canadian Natural has grown from tiny producer to a company with a stock market capitalization of $28 billion, Barron's said.

The company's promising oil-sands project in Alberta is expected to start producing crude in 2008. The stock could jump in the next two years as the project nears completion, Barron's said.

The company aims to boost daily energy output, which is now equal to 600,000 barrels a day and split between oil and gas, to 1 million barrels by the end of 2012, Barron's said.

"Given the strength of the company's asset base and given how much of the world's oil and gas reserves are in inhospitable places, we don't think we can lose a lot," Bruce Berkowitz, who heads Fairholme Capital Management, told Barron's. Fairholme owns shares in Canadian Natural.

"And in the best case, it's a grand slam," he told Barron's.

The stock was recently boosted by Royal Dutch Shell Plc's offer to buy out minority holders of Shell Canada for $7 billion. Shell Canada's market value is attributed to its 60 percent stake in the Athabasca project, one of three major oil-sands projects operating, Barron's said.

Chevron Corp. will participate in Shell Canada Ltd.'s plans to expand the Athabasca oil sands project in Alberta, despite a multibillion-dollar surge in capital costs, the oil major said.

Chevron's approval of the expansion, which will boost output at the northern Alberta operation to 255,000 barrels a day from 155,000, follows that of partner Western Oil Sands Inc. on Wednesday.

With its 20 percent stake, Chevron estimated its share of project costs at about $2 billion.

Western also has a 20 percent interest and Shell has the remainder and is operator.

In July, Shell said the cost of the project could be between C$10 billion and C$12.8 billion ($8.9 billion and $11.4 billion), up from a previous projection of about C$7 billion.

It blamed the jump on Alberta's overheated construction scene amid a rush to develop oil sands projects. The boom has stretched the labor force and fueled inflation in materials costs.

But Shell said it still expected attractive returns.

The expansion phase includes construction of mining and bitumen extraction facilities at the Jackpine mine, north of Fort McMurray, Alberta, and an expansion of the Scotford upgrader near Edmonton.

Chevron Corp., the second-largest U.S. oil company, said third-quarter profit rose to $5.02 billion from $3.59 billion as oil prices rose to a record and last year's Unocal Corp. acquisition boosted production.

Per-share profit climbed to $2.29 from $1.64 a year earlier, the San Ramon, California-based company said today in a statement on PR Newswire.

Chief Executive Officer David O'Reilly tapped new wells in Africa and the Caribbean and had Unocal's operations for the full quarter after buying the company in August 2005. Chevron also resumed output from some Gulf of Mexico wells and onshore fuel plants that were idled a year earlier by hurricanes. The company last month took the first step toward unlocking reserves beneath the Gulf that may be as vast as Alaska's Prudhoe Bay.

``Chevron has been plodding along, investing in their operations, and they've had some big finds which have the potential for long-term future payoffs,'' said Douglas Christopher, who helps manage $8 billion, including Chevron shares, at Crowell Weedon & Co. in Los Angeles.

U.S. oil futures traded 12 percent higher than a year earlier, at a third-quarter average of $70.60 per barrel. Prices climbed, reaching a record $78.40 in July, as militants disrupted supplies in Nigeria, Africa's biggest crude producer, and worldwide demand rose.

Unocal Wells

The earnings statement was released before the opening of regular trading on U.S. stock markets. Shares of Chevron yesterday fell 8 cents to $67.50 in New York Stock Exchange composite trading. The stock, which has climbed 19 percent this year, has 11 buy ratings, 12 hold recommendations and one sell rating from analysts.

Each $1 increase in the price of oil boosts Chevron's per- share earnings by 1.8 percent, said William Featherston, a UBS Securities LLC analyst who rates the company's stock at ``neutral.''

Chevron raised production at its Lobito field off the Angolan coast, part of the company's $2.3 billion BBLT deepwater development, and by tapping the Dolphin Deep gas field in Trinidad & Tobago, said Daniel Barcelo, an analyst at Banc of America Securities in New York who rates the company's shares a ``buy'' and doesn't own any.

Chevron's results capped a week of earnings announcements by five of the world's six largest publicly traded oil companies. Irving, Texas-based Exxon Mobil Corp., the world's largest oil company, yesterday reported net income of $10.5 billion, up 5.7 percent from a year earlier.

Big Oil

Exxon Mobil, Houston-based ConocoPhillips and Europe's Royal Dutch Shell Plc and BP Plc netted more than $26.5 billion combined in the quarter. That works out to $200,000 a minute.

U.S. refining margins averaged about $11 per barrel during the third quarter, down 26 percent from a year earlier, based on benchmark crude-oil and fuel futures traded in New York. Retail gasoline prices in the U.S. dropped 19 percent as fuel output grew faster than demand.

O'Reilly, a Dublin-born chemical engineer, is in talks to join with Chinese petroleum producers on exploration and production ventures one year after beating out China's Cnooc Ltd. to acquire Unocal.

Last month, Chevron announced it had completed the deepest successful test of a Gulf of Mexico well, showing it may be possible to produce billions of barrels of oil from undersea reservoirs previously thought too deep to exploit.

Jack No. 2

The Jack No. 2 well, operated and 50 percent owned by Chevron, dug into geologic formations that are two miles deeper than the Gulf fields pumped today.

The Jack field, discovered by Chevron in July 2004, may hold as much as 500 million barrels of oil, Barcelo said. The field is 20,000 feet (6,096 meters) below the seafloor under 7,000 feet of water.

Jack and nearby discoveries, such as Chevron's Tahiti and BP Plc's Kaskida fields, are part of a layer of rocks between 24 million and 65 million years old that span thousands of square miles beneath the Gulf and may hold 3 billion to 15 billion barrels of crude and gas.

Chevron expects to begin producing oil and gas from Jack in six or seven years.

Oil rose toward $61 a barrel on Friday after Britain's Royal Navy said it was deploying forces to counter a possible threat to the world's largest oil export terminal in Saudi Arabia.

Exports from Ras Tanura were continuing as normal, industry sources said. The navy issued a warning in a statement to merchant shipping as a precautionary measure after receiving intelligence of a possible threat.

"Coalition, Saudi and Bahraini units in the general vicinity are focusing on presence and deterrence in the approaches to Ras Tanura," the statement said.

U.S. crude was up 30 cents at $60.66 a barrel by 1338 GMT, rebounding from an earlier decline. London Brent gained 31 cents to $61.08.

Industry sources said the deployment was routine. Ras Tanura has a capacity of 6 million barrels per day, according to the U.S. Department of Energy.

Prices were also supported by OPEC's agreement last week to lower supply, just as winter fuel demand in the northern hemisphere is set to rise.

"Basically, you have OPEC cutting and seasonal increases in crude demand going forward," said Mike Wittner of investment bank Calyon. "There will be uplift for prices."

Earlier on Friday, oil had eased on expectations that U.S. crude inventories would rebound from a drop last week that was caused by a temporary closure of the nation's biggest oil port.

OPEC CUTBACKS

The Organization of the Petroleum Exporting Countries last week agreed to cut supply by 1.2 million barrels per day to stem a sharp slide in prices from a peak of $78.40 hit in July.

On Thursday, Libya and Kuwait joined the United Arab Emirates, Saudi Arabia and Iran in disclosing production cuts.

Iran's oil exports will drop by 176,000 bpd as OPEC's second largest producer implements its share of a deal to cut output, Iran's oil minister said on Friday.

"This amount will be from the actual production of the country and considering the fact that domestic consumption is fixed, Iran's oil exports will decrease by this amount," Oil Minister Kazem Vaziri-Hamaneh said, Iran's student news agency ISNA reported.

Kuwait will cut oil output by 100,000 bpd from November 1, while Libya will make a supply cut of 72,000 bpd. Traders are now watching for actual cutbacks in supply allocations to oil firms.

Nigeria's shipments have remained steady despite its pledge to cut output by 100,000 bpd, while the UAE may fail to meet its 100,000 bpd cut, traders said.

Some OPEC members have said the exporter group may need to trim supply further at its next meeting, scheduled to take place in Abuja, Nigeria on December 14.

Cabot Oil & Gas Corp., an oil and gas explorer, on Thursday said its third-quarter earnings climbed sharply on a combination of rising oil prices, greater production and the sale of some company assets.

Quarterly earnings rose to $189 million, or $3.92 per share, from $33.8 million, or 69 cents per share, during the same period a year ago.

The results included a $143.6 million after-tax gain from the sale of its offshore and south Louisiana assets in September. Excluding the sale, Cabot Oil & Gas earned $45.4 million, or 94 cents per share, in the period.

Analysts polled by Thomson Financial forecast a profit of 81 cents per share.

Revenue grew 14 percent to $184.7 million from $161.8 million a year ago. Analysts forecast revenue of $165.8 million.

The company said production in the quarter rose 12 percent and while natural gas prices remained flat, oil prices spiked by 52 percent.

Shares of Cabot Oil & Gas fell 44 cents to $52.51 in afternoon trading on the New York Stock Exchange.

Oil and gas producer Apache Corp. on Thursday posted a decline in third-quarter earnings as weaker oil production, lower natural gas prices and increased operating costs weighed on results.

After paying preferred dividends, net income fell to $645.6 million, or $1.94 per share, from $685.6 million, or $2.05 per share, in the year-ago period.

Revenue rose 10 percent to $2.26 billion from $2.06 billion in the year-earlier quarter. Operating costs climbed 22 percent.

The results topped the expectations of Wall Street analysts, and the company's shares rose 34 cents in premarket activity to $69.25. The stock closed at $68.91 Wednesday on the New York Stock Exchange.

Analysts polled by Thomson Financial forecast earnings of $1.89 per share and sales of $2.18 billion.

Oil production dropped to 216,468 barrels per day, down 6 percent from 233,692 barrels per day due to the sale of an oil field in China and shutdowns at fields in the North Sea and Egypt. The company's average oil price rose to $63.66 from $58.66 year-over-year.

Natural gas volume rose to 1.71 billion cubic feet per day, up 35 percent from 1.26 billion cubic feet per day. Natural gas prices slid to $4.83 per thousand cubic feet from $6.54.

Apache said it remains "on track" for 10 percent to 15 percent growth in production this year.

Oil eased slightly but remained comfortably above $61 on Thursday after a surprise drop in U.S. crude stocks and more evidence of OPEC cuts triggered the biggest one-day gain in 7 months the previous session.

U.S crude was down 2 cents at $61.38 a barrel by 0816 GMT, giving up some of Wednesday's 3.5 percent surge.

London Brent crude was down 8 cents at $61.97.

Prices spiked to their highest since October 2 on Wednesday after U.S. data showed crude stocks in the world's top consumer fell last week. Tha market had expected a rise.

"The unexpected stock figures from the United States really helped to put the colour back into oil," said Gerard Burg, a commodities analyst at National Australia Bank.

The drop in crude inventories was due to the closure of the Louisiana Offshore Oil Port, the country's biggest oil import facility, for three days last week.

Christopher Bellew, a broker at Bache Financial, noted U.S. oil stocks remained very comfortable however.

"It's slightly specious bullish news," he said of Wednesday's inventory data. "Stocks are still high and there is refinery maintenance, which high stocks allow."

More evidence of OPEC's resolve to make good its pledge to cut 1.2 million barrels per day of production has also helped prices recover from a 2006 low of $56.55 a barrel last week, when traders questioned some OPEC members' willingness to cut.

An Iranian official said on Wednesday it had informed customers it would be cutting November supplies by 176,000 bpd. A Nigerian official said the country would extend the 5 percent curbs it imposed voluntarily this month into November.

Customers of leading exporter Saudi Arabia and the UAE said earlier this week they were notified of cuts.

"OPEC is showing some backbone," said Tony Nunan, a risk manager with Japan's Mitsubishi Corp. "It looks like we have now confirmed the medium-term bottom (for prices)."

Weather concerns have also helped the recovery, with an early chill in the Northeast set to keep oil demand strong over the next five days, according to forecaster Meteorlogix.

Oil prices rose in Asian trading hours, boosted by lower US inventories and concern about a cold snap in the northeast of the US, the world's biggest consumer of heating oil, dealers said.

At 10.43 am here (0243 GMT), the New York Mercantile Exchange's main contract, light sweet crude for December delivery, was up 0.25 usd at 61.65 usd a barrel from 61.40 usd in late trading in the US overnight, after the contract had jumped there by 2.05 usd.

Brent North Sea crude for December delivery had gained 0.23 usd at 62.28 usd. The contract had risen by 2.22 usd in London.

Steve Rowles, an analyst with CFC Seymour in Hong Kong, said: 'Demand is increasing because of the cold weather. The colder it is, the higher the demand for heating oil, and supply is falling because of the OPEC production cuts. The fundamentals of supply and demand are coming back into play.'

Temperatures in the northeastern US are expected to be well below the seasonal average until at least the start of next month, forecasters say.

The US Department of Energy (DoE) said overnight that crude oil inventories had unexpectedly declined by 3.3 mln barrels to 332.3 mln in the week ended Oct 20, compared to market forecasts of an increase on a similar scale.

It was the biggest weekly fall since July, but the DoE said crude levels 'remain well above the upper end of the average range for this time of year.'

US crude oil imports averaged 9.5 mln barrels per day (bpd) last week, down a hefty 936,000 bpd from the week before.

Levels of distillate products, including heating oil and diesel fuel, were down 1.4 mln barrels at 144 mln over the week. Gasoline stocks fell 2.8 mln barrels to 207.4 mln.

Phil Flynn, at Alaron Trading, said the steep drop in US imports 'may mean that some OPEC countries have already started to reduce their production.'

The 11-member OPEC said Friday it would to cut output by 1.2 mln bpd from Nov 1 in an effort to support prices, which had been trading about 25 pct below the record highs above 78.00 usd they reached in July.

Saudi Arabia, which is to shoulder nearly a third of the output cuts, has told its Asian customers it will reduce their November deliveries by 8 pct, but the market continues to watch whether the cartel can do what it has said it will do.

Fimat analyst Mike Fitzpatrick said the United Arab Emirates had joined Saudi Arabia in telling customers that export cuts were coming.

'But other members have yet to provide evidence. With oil prices still relatively high, there is still a good bit of skepticism that the cartel can enforce quota discipline,' he said.

Crude oil rose a third day in New York after a government report showed U.S. oil stockpiles unexpectedly fell last week and product demand rose to its highest this year.

U.S. crude inventories dropped 3.21 million barrels last week, the biggest decline since July, after imports plunged, the Energy Department reported yesterday. Demand for gasoline and other products rose to an average 21.5 million barrels a day, the highest since the week ended Dec. 23, 2005.

``The market was led by products, gasoline in particular,'' said Randy Simpson, vice-president of supply and trading at New West Petroleum Inc. in Sacramento, California. ``Implied demand for gasoline has gone through the roof.''

Crude oil for December delivery rose as much as 32 cents, or 0.5 percent, to $61.72 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 8:30 a.m. in Sydney.

The contract jumped $2.05, or 3.5 percent, to $61.40 yesterday, the highest since Sept. 29 and the biggest one-day gain since March.

U.S. oil stockpiles, already above-average, were expected to gain 3 million barrels last week as refiners shut units for pre- winter maintenance, according to a Bloomberg news survey of 15 analysts. Gasoline stockpiles fell 1.3 million barrels, more than twice the decline forecast.

``It's clearly very bullish,'' Peter Linder, an energy analyst and senior adviser with DeltaOne Capital Partners in Calgary, said yesterday. ``We've already seen the beginning of winter and we'll start to see OPEC cuts next week. I'm convinced we've seen the low prices for the year.''

Cold Weather

Oil reached a 10-month low of $56.55 a barrel on Oct. 20, when the November contract expired. December oil has gained 3.9 percent this week as cold temperatures boosted heating demand in the northern U.S. and after the Organization of Petroleum Exporting Countries said they will cut production by 1.2 million barrels a day starting Nov. 1.

Reformulated gasoline for November delivery was at $1.53 a gallon, after rising 3.6 percent yesterday. Heating oil was at $1.74 a gallon, after rising 2.6 percent yesterday.

Gasoline and heating oil had found a ``pretty solid base'' around $1.50 and $1.65 gallon respectively the past month, New West's Simpson said. The ``unexpected and reasonably bullish inventory numbers'' had given bulls in the market an excuse to push prices higher, he said.

Oil reached a record $78.40 on July 14 on concern there was not sufficient spare production capacity if Israel's attack on Lebanon that month disrupted supplies from the Middle East, source of a third of the world's oil.

Nigeria Seizures

Oil also rose yesterday after Chevron Corp. and Royal Dutch Shell Plc. said their ventures in Nigeria, Africa's biggest oil producer, had four pumping stations seized as part of villagers' protests in the Niger delta.

About 15,000 barrels a day of oil output have been halted at Chevron's Robertkiri flow station, Femi Odumabo, a spokesman for the U.S. company's local venture, said by phone today from Lagos.

Three Shell flow stations -- Ekulama 1 and 2 and Belema -- have also been affected by the protest, said Eurwen Thomas, a Shell spokeswoman in London. Thomas declined to comment on any impact on production. The Ekulama 1 station, which pumps about 9,000 barrels a day, had already been closed following a militant attack in early October.

Crude oil prices rose above $61 a barrel Wednesday after a new report showed U.S. inventories dropped last week, OPEC members began taking steps to implement production cuts and Nigerian villagers attacked oil facilities.

Though global 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, Wednesday's news drove traders to bet on tightening supplies going into the North American winter, when demand for heating oil and natural gas ramps up.

Light sweet crude for December delivery climbed $1.78 to $61.14 a barrel in afternoon trading Wednesday on the New York Mercantile Exchange.

Crude oil stockpiles fell by 3.3 million barrels to 332.3 million barrels, 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.

"We still are adequate as total inventories go on crude, but we have seen two decent-sized draw-downs in last two weeks, contrary to expectations," said Tom Bentz, analyst at BNP Paribas Commodity Futures in New York.

Heating oil futures rose 4.23 cents to $1.7735 a gallon on the Nymex, while gasoline futures increased 4.05 cents to $1.57 gallon.

Natural gas futures surged 56.3 cents to $7.654 per thousand cubic feet. Natural gas supply figures from the EIA will be released Thursday.

Crude futures had fallen to an 11-month low below $57 a barrel Friday - even after OPEC decided to reduce its daily production by a larger-than-anticipated amount of 1.2 million barrels - amid doubts about OPEC's ability to implement the decision to cut daily production.

But prices have bounced back up above $60 a barrel - the threshold OPEC ministers said they wanted to maintain - 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. The OPEC agreement reached last week stipulated that Saudi Arabia would cut of 380,000 barrels a day; the United Arab Emirates would cut 101,000 barrels a day; and Iran would cut 176,000 barrels a day.

Bentz said the notifications to major oil companies are significant, adding, "they don't go back on that."

Other market watchers, though, say it's not enough proof that less oil will be put on the market.

"I have no idea that that's going to happen. You could be telling certain customers, and not others. OPEC has hundreds of customers," said Oppenheimer & Co. analyst Fadel Gheit. "Talk is cheap. Oil isn't. These guys have a way of playing with the market. As long as the market is receptive ... they can have their cake and eat it too: high oil prices and high production at the same time."

Meanwhile, in Nigeria, angry villagers stormed and seized three Royal Dutch Shell PLC oil platforms Wednesday 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.

Oil futures rose after the U.S. government reported that supplies had their biggest one-week decline since July, contradicting analysts' forecasts that stockpiles would increase.

U.S. crude inventories dropped 3.21 million barrels last week to 332.3 million after imports tumbled 6.9 percent from the average of the past four weeks, the Energy Department reported. Stockpiles had been forecast to rise 3 million barrels, the median estimate of 15 responses in a Bloomberg survey. Supplies of gasoline and distillate fuel also fell last week.

``It's clearly very bullish,'' said Peter Linder, an energy analyst and senior adviser with DeltaOne Capital Partners in Calgary. ``We've already seen the beginning of winter and we'll start to see OPEC cuts next week. I'm convinced we've seen the low prices for the year.''

Crude oil for December delivery rose $1.32, or 2.2 percent, to $60.67 a barrel at 11:20 a.m. on the New York Mercantile Exchange. Futures have gained 3.2 percent so far this week.

Brent crude for December settlement advanced $1.38, or 2.3 percent, to $61.24 a barrel on the ICE Futures exchange in London.

A decline in crude imports contributed to the drop in inventories, the Energy Department said in its commentary on supplies. U.S. imports averaged 9.5 million barrels a day last week, compared with an average 10.2 million in the previous four weeks. Refineries operated at 86.2 percent of capacity, down 0.1 percentage point from the previous week.

Stockpiles of crude oil fell as the Organization of Petroleum Exporting Countries, which pumps 40 percent of the world's oil, said last week it would cut output 1.2 million barrels a day starting Nov. 1 in an effort to support prices. Nymex crude has dropped about 23 percent from a record high of $78.40 on July 14.

`A Hard Push'

A price of $60 a barrel ``is a level that OPEC claimed they would defend,'' said Michael Rose, head of the trading desk at broker Angus Jackson Inc. in Fort Lauderdale, Florida. ``I believe they will defend that. If it goes lower it's going to be a hard push.''

Oil also rose on speculation a fire at India's largest refinery will limit fuel supplies in Asia and on concern that Iran's nuclear program will escalate tensions in the Middle East.

Reliance Industries Ltd. shut two diesel-processing units after a blaze at 10:40 a.m. local time.

Nuclear Research

The price of oil also climbed after Agence France-Presse reported that Iran, the world's fourth-largest oil supplier, will take another step in its nuclear research, which is opposed by the European Union and the U.S.

Iran will use a new uranium enrichment device for the first time this week, AFP said, citing the official Iranian Students News Agency.

The U.S. accuses Iran of conducting nuclear research so it can build a bomb. Iran says it wants to produce electricity. Oil traders say the dispute about Iran's uranium enrichment may disrupt crude supplies from the Middle East.

Iran will reply with ``appropriate measures'' to any United Nations sanctions, Foreign Ministry spokesman Mohammad Ali Hosseini was quoted as saying by the state-run Fars news agency last week. He did not elaborate.

``We never use oil as a weapon, and we never will, unless the country were in danger,'' Iranian Oil Minister Kazem Vaziri- Haman said in an interview on Oct. 20. ``We have never spoken about oil as a weapon.''

Heating Demand

Crude is also being pushed up by rising demand for heating oil, which peaks in the fourth quarter, when refiners in the U.S., Europe and north Asia supply winter fuel.

Below-normal temperatures until Oct. 31 in the U.S. Northeast, the nation's largest heating-oil consumer, will boost heating demand 30 percent above normal for this time of year, researcher Weather Derivatives said.

Heating oil for November delivery jumped 3.78 cents, or 2.2 percent, to $1.733 a gallon on the Nymex after touching $1.742 earlier.

U.S. supplies of distillates, including heating oil and diesel, dropped by 1.42 million barrels in the week to Oct. 20, their third consecutive decline. Analysts in the Bloomberg News survey had forecast decline of 1.5 million barrels. Demand for distillate fuels has averaged 6 percent more in the past four weeks than the same period a year ago.

``Demand has been strong and November is going to be more bullish,'' said Jason Schenker, an economist with Wachovia Corp. in Charlotte, North Carolina.

Demand for all fuels has been higher in the last four weeks than it was last year after Hurricanes Rita and Katrina damped demand across the U.S. Gasoline demand has averaged 9.3 million barrels a day in the period, a 3.3 percent increase from last year. Jet fuel demand rose 4.1 percent, the Energy Department said.

Above Average

Stockpiles of crude and oil products remain at ``the upper end of the average range for this time of year,'' the Energy Department's commentary said. Crude stockpiles now stand at 12 percent above the five-year average, gasoline is 3.4 percent higher and heating oil stocks are 9.5 percent above the five-year norm, Energy Department statistics showed.

Canadian oil and gas producer EnCana Corp. on Wednesday said third-quarter profit surged on stronger natural gas volumes and higher prices for oil and gas liquids, as well as one-time gains.

Earnings ballooned to $1.36 billion, or $1.65 per share, from $266 million, or 30 cents per share, in the year-earlier quarter. The recent quarter includes a 31-cent gain on the sale of an interest in an oil discovery offshore Brazil and a 34-cent gain on commodity price hedges.

Stripping out those gains, the company would have earned $1 per share. On average, analysts polled by Thomson Financial expected earnings of 92 cents per share, excluding one-time items.

Revenue grew 32 percent to $3.92 billion from $2.98 billion a year ago.

Natural gas sales rose 4 percent year over year to 3.36 billion cubic feet per day. EnCana's average realized price in the third quarter, including hedges, fell 5 percent to $6.57 per thousand cubic feet. The company said it had about 1.2 billion cubic feet of natural gas production per day hedged as of Sept. 30.

Oil and natural gas liquids sales fell 31 percent to 150,565 barrels per day. The company's realized liquids prices, including hedges, rose 16 percent to average $46.92 per barrel.

"As we look to 2007, we recognize that winter weather will play a strong role in determining 2007 gas prices, and we share investors' concerns for potential price weakness in the short term," said President and Chief Executive Randy Eresman, in a statement.

He said that due to "commodity price uncertainty and high industry inflation, we believe it is prudent to temporarily reduce our growth objectives and return excess cash to shareholders through continued share buybacks rather than pursue growth at elevated costs."

For the year, the company expects natural gas sales of 3.36 billion to 3.4 billion cubic feet, a 5 percent increase at the midpoint over 2005 sales. Oil and natural gas liquids sales are expected to range from 155,000 to 160,000 barrels per day.

EnCana shares fell 38 cents to $47.42 in morning trading on the New York Stock Exchange.

Crude oil was little changed in New York after rising yesterday as frigid weather in the U.S. focused investors on peak winter heating demand.

Freezing winds sweeping across the northern U.S. may bring snow to parts of Colorado and Wyoming, forecaster AccuWeather Inc. said on its Web site. Below-normal temperatures through Oct. 31 in the Northeast, the nation's largest heating oil consumer, will lift heating demand 30 percent above levels usual for this time of year, researcher Weather Derivatives said.

``I think oil is going to hold from here,'' said Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California. ``You don't usually get snow until the beginning of November.''

Crude oil for December delivery was at $59.55 a barrel, up 20 cents, in after-hours electronic trading on the New York Mercantile Exchange at 8:29 a.m. in Sydney.

The contract rose 54 cents, or 0.9 percent, to $59.35 a barrel yesterday, its first gain in three days. Heating oil for November delivery was at $1.6988 a gallon after rising 1.6 percent yesterday.

``It's pretty cold out there right now,'' Phil Flynn, vice president of risk management at Alaron Trading Corp. in Chicago, said yesterday. ``We're getting into the winter season and consumption is going to go up.''

World oil demand peaks in the fourth quarter when refiners in the U.S., Europe and northern Asia prepare heating fuel for the winter.

Winter Rebound

The early cold snap coupled with the contract's failure to breach long-term support around $58.60 a barrel, may be enough to stall the recent slide in prices, Excel's Waggoner said.

``December is a fairly active month,'' he said. ``A lot of people were expecting the market to break down. But we hit that support and it's gone straight back up.''

Oil prices have fallen 24 percent from the record $78.40 reached on July 14. Futures slid the past two months as fuel stockpiles in the U.S., the world's biggest oil consumer, rose and forecasters including the Organization of Petroleum Exporting Countries trimmed their demand projections citing slower global economic growth.

U.S. oil stockpiles held 335.5 million barrels on Oct. 13, or 14 percent more than the five-year average for the period. Supplies of distillates, including heating oil and diesel, were 145.4 million barrels, 15 percent more than average.

An Energy Department report later today will probably show crude oil supplies gained 2.9 million barrels last week, based on the median estimate from a Bloomberg News survey of 10 analysts. Distillate supplies may have dropped by 1.25 million barrels while refiners had units shut for pre-winter maintenance, according to the survey.

``We have ample stocks,'' Andrew Lebow, a broker with Man Financial in New York, said yesterday ``We're well above last year and well above the average. We've got a way to go here to draw back to normal'' levels.

World oil prices rebounded slightly on Tuesday on concerns that cold weather in the United States would increase demand for heating fuel, traders said.

Prices rose despite Norway's leading oil company Statoil saying it was ready to resume production at its Snorre A platform in the North Sea after a 10-day halt due to safety problems, and concerns that the OPEC oil-producing cartel may fail to cut output as promised.

New York's main contract, light sweet crude for delivery in December, advanced 49 cents to 59.30 dollars per barrel in pit trading.

In London, Brent North Sea crude for December delivery gained 54 cents to 59.75 dollars per barrel in electronic deals.

North-eastern parts of the United States are experiencing colder than normal temperatures heading into the northern hemisphere winter, with the state of New York already having snow.

The US north-east, the world's biggest consumer of heating fuel, is expected to see temperatures of between five and 15 degrees Celsius below the seasonal average until at least the start of November, according to The Weather Channel.

Demand for US heating fuel was set to jump by 15 per cent above the seasonal average next week, according to Weather Derivatives.

Traders were meanwhile gearing up for tomorrow's market update on the state of energy stockpiles in the United States, which is the world's biggest consumer of energy.

Royal Dutch Shell PLC's $7.7-billion bid for the portion of Shell Canada Ltd. it does not own could be the beginning of a rush by international companies looking for major Canadian players in the Alberta oil sands, observers say.

Royal Dutch Shell already owns 78 per cent of Shell Canada and yesterday told the board of directors at Calgary-based Shell Canada it is preparing to make a formal bid of $40 a share in cash, adding that it would not proceed unless it has majority support among minority shareholders.

Companies now potentially in play include Canadian Oil Sands Trust, which owns the largest stake in oil sands miner Syncrude Canada Ltd., and Imperial Oil Ltd., majority owned by Exxon Mobil Corp., according to Kim Shannon, president of Sionna Investment Managers Inc.

UBS Securities Canada Inc. said other oil sands names such as Suncor Energy Inc., Canadian Natural Resources Ltd., Nexen Inc. and EnCana Corp. "could all be considered takeout targets."

The reasons for international interest in Canada and the oil sands are abundantly clear. The country is a rarity in the world of crude, a politically stable jurisdiction where oil production is forecast to rise to 4.5 million barrels a day by 2015 from 2.5 million now. That would vault Canada to the No. 4 position among the world's oil producers, behind Saudi Arabia, Russia and the U.S.

"Symbolic for all Canadian oil companies, the trading has begun," said Ms. Shannon, whose firm is one of largest shareholders of Shell Canada, a major oil sands producer with large natural gas holdings as well.

UBS, in a report, said: "[Royal Dutch] could be the kickoff to widespread consolidation in the Canadian oils as majors seek to position themselves with large, low-risk resources."

Len Racioppo, president of Jarislowsky Fraser Ltd., a large Shell Canada shareholder, said the Canadian market in general "is wide open to anyone in the world," adding that lower oil and natural gas prices compared with highs seen in the past year could stoke activity.

"It wouldn't surprise me if the [mergers and acquisition] activity began to percolate in energy," Mr. Racioppo said.

Such activity isn't a given, however. The price tags could be astounding and that could potentially quell wholesale consolidation. Suncor's market value is $39-billion, suggesting a successful bid would have to be roughly $50-billion, which is more than double the $19-billion being paid by Brazil's Companhia Vale do Rio Doce for Canadian miner Inco Ltd.

"Never say never, but we're a pretty big company," Murray Edwards, vice-chairman of Canadian Natural Resources, told reporters recently. Canadian Natural is worth $30-billion and he suggested he would be unwilling to sell, noting that he had never entertained overtures.

"Never had meetings, no discussions," Mr. Edwards said.

The potential of large-scale takeovers follows escalating international interest in the oil sands, highlighted by several much smaller deals, including Total SA of France's $1.7-billion purchase of junior Deer Creek Resources last year.

Beyond its interest in Shell Canada, Royal Dutch has already poured money into the oil sands, this year paying about $600-million at provincial government auctions to lease fringe land for which commercial technology to extract the crude doesn't even exist.

The company, based in The Hague, was hit with a scandal several years ago when it was revealed its reserves were far smaller than disclosed, and is struggling to rebuild that base.

Options for Royal Dutch Shell's growth in other countries are problematic. In Russia, the company is dealing with an angry government, where the Kremlin has threatened to revoke permits at a Royal Dutch development in Russia's far east.

"We look at Canada as one of our major growth areas for decades to come," Peter Voser, Royal Dutch chief financial officer, said in an interview.

Among Shell Canada's largest shareholders are Capital Research & Management of Los Angeles, Sionna of Toronto, Jarislowsky Fraser, of Toronto, and Calgary's Bissett Investment Management.

Many of the shareholders believe Shell is worth more than $40. The company's stock hit an all-time high of $47.19 a share in January. It has a large operating oil sands mine, with plans for large expansions, and holds oil sands interests in northwestern Alberta as well. Shell Canada also has strong natural gas assets in the Alberta Foothills and the Mackenzie Delta.

"Forty dollars is not sufficient," said Garey Aitken, a Bissett vice-president. "There's a lot of hidden asset value here."

Stock of Shell Canada jumped to $42.55 on the Toronto Stock Exchange yesterday, up $9.75 or 29.7 per cent from Friday's close of $32.80.

Mr. Racioppo said Royal Dutch is being "opportunistic," adding that the bid could rise far higher, and further noting that he would be content to continue to hold Shell Canada shares if the price isn't right.

Royal Dutch insisted its offer was "full and fair," though Mr. Voser seemed to suggest that the price could rise. "I think the market, indeed, will determine the price of the deal," Mr. Voser said.

A further issue, for Alberta and Canada, is where Royal Dutch would upgrade the raw bitumen it extracts. Royal Dutch said yesterday it very much plans to export bitumen to the U.S. or further abroad for upgrading and refining.

Canadian stocks rose to the highest in six weeks after Shell Canada Ltd. received a takeover bid from Royal Dutch Shell Plc, fueling speculation that there may be more mergers in the nation's oil and gas industry.

``When you see a merger like this, it should give oil and gas stocks some strength,'' said Jackee Pratt, who helps manage $712 million at Mavrix Fund Management Inc. in Toronto. ``This bid is saying: The oil sands are worth something, gas is worth something.''

The Standard & Poor's/TSX Composite Index climbed 83.58, or 0.7 percent, to 12,119.15 in Toronto, the highest since Sept. 5. The benchmark reached a record 12,487.32 on April 19 amid soaring oil and metals prices.

Shell Canada jumped C$9.75, or 30 percent, to C$42.55 for the top gain in the S&P/TSX. Royal Dutch Shell offered C$7.7 billion ($6.8 billion) for the 22 percent of Shell Canada that 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 stake, it said in a statement. That's 22 percent more than Shell Canada's last closing price. Investors speculated that Royal Dutch will eventually have to pay more to win all of Shell Canada.

``The offer is too low -- the market is telling you that,'' said Len Racioppo, president of Montreal-based money manager Jarislowsky Fraser Ltd., which has about 29.5 million Shell Canada shares among the $54 billion in assets it manages.

Oil Companies `All Open'

Other Canadian oil producers may see takeover offers now that the price of oil has leveled off from records, said Racioppo. Apart from Imperial Oil Ltd., none of the large Canadian oil and gas companies have controlling shareholders, Racioppo said. ``They're all open.''

Canadian Natural Resources Ltd., the second-largest producer of natural gas in the country, gained C$1.68 to C$57.08. Some energy stocks declined. Petro-Canada, the nation's third-biggest oil and gas producer, fell 13 cents to C$46.17.

Imperial rose C$1.87 to C$38.37. Canada's biggest oil and gas producer is 69 percent owned by Exxon Mobil Corp.

NQL Energy Services Inc. jumped C$1.49, or 25 percent, to C$7.51 after National Oilwell Varco Inc., the biggest U.S. maker of oilfield equipment, agreed to acquire NQL for about C$345 million ($306 million).

Crude oil for December delivery fell 0.9 percent to $58.81 a barrel in New York, on doubt that the Organization of Petroleum Exporting Countries will cut production by as much as its members pledged last week. Prices have plunged 25 percent from the record of $78.40 a barrel reached July 14.

Crude oil fell for a second day on skepticism that the Organization of Petroleum Exporting Countries will cut production by as much as members pledged last week.

OPEC's reductions will be ``significantly less'' than agreed, amid doubts some members of the group will act at all, the London-based Centre for Global Energy Studies said in a report today. 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.

``If OPEC is going to be an effective organization it will have to send a clear signal that it will follow through with these cuts,'' said Phil Flynn, vice president of risk management with Alaron Trading Corp. in Chicago. ``The Saudis are telling customers that they can expect less oil but we have yet to see any movement from the smaller OPEC members.''

Crude oil for December delivery fell 80 cents, or 1.4 percent, to $58.53 a barrel at 10:55 a.m. on the New York Mercantile Exchange. Futures are down 3.4 percent from a year ago. Prices have plunged 25 percent from the record of $78.40 a barrel reached July 14.

CGES, which was founded by former Saudi oil minister Sheikh Zaki Yamani, said OPEC's determination to reduce supply shows the organization is trying to defend a price of ``at least $55 a barrel for its basket of crude oil grades.'' The OPEC basket price stood at $54.56 on Oct. 19.

Saudi Exports

Saudi Arabia will cut shipments to Japan, its largest customer, in November for the first time in more than two years after last week's decision by OPEC's members. Supplies to Japanese refiners will be reduced as much as 8 percent below contractual volumes, refinery officials said.

``I'm surprised that OPEC is being given such a hard time,'' said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons Inc. in St. Louis. ``The news from Asia shows that the Saudis are on board, but doubts about other members remain.''

OPEC's Oct. 20 statement said 10 of its members, all except Iraq, would ``reduce production by an amount of 1.2 million barrels a day, from current production of about 27.5 million barrels a day, to 26.3 million barrels a day, effective 1st November 2006,'' adding that the decision would be subject to review at a Dec. 14 meeting in Abuja, Nigeria.

``The Saudis immediately informed customers that they will reduce shipments and OPEC made it clear that they were open to a follow-up cut in December, which signals that they are serious about supporting prices,'' said Tim Evans, an energy analyst at Citigroup Global Markets Inc. in New York.

Brent crude oil for December settlement fell 63 cents, or 1.1 percent, to $59.05 a barrel on the London-based ICE Futures exchange.

The behemoth rises from the Atlantic Ocean seabed, testament to Africa's growing importance to an energy-hungry world fearful of its dependence on the explosive Middle East, and to Angola's growing importance within Africa.

Chevron's $2.3 billion Benguela Belize platform, dwarfing the Statue of Liberty at 1,680 feet, is the third such tower built in the world. It is the first outside of the Gulf of Mexico, and an innovation in Africa's Gulf of Guinea, where floating platforms long have held sway. Drilling some months ago drew the first crude into the structure.

"Within a few years, analysts reckon Nigeria (sub-Sahara Africa's biggest oil producer) will be playing catch-up with Angola" in deep-water production, Petroleum Economist magazine says in its latest edition.

Angola's oil output is pro- jected to surpass 2 million barrels a day next year and increase by 90 percent from 2005 levels by 2010, according to conservative estimates of the International Monetary Fund. It says that would double Angolan government revenues, even allowing for a price drop. Chevron produces just over 500,000 barrels a day and plans to double production in the next five years.

Low-level conflict

Angola offers stability despite a 30-year civil war and a continuing low-level conflict by separatists in the Cabinda enclave, where the vast majority of its oil is produced. The recent signing of a peace pact with one separatist faction coincided with deployments of more government troops in the enclave, where human rights activists say the government is trying to suppress them.

The Gulf of Guinea encompasses waters from all of sub-Saharan Africa's oil producers except South Africa and is a magnet for investment where competition for influence is fierce between European, U.S., Chinese, Indian and other Asian interests.

This year, Angola overtook Saudi Arabia as the leading source of crude oil for China. China's president and prime minister visited Africa this year, as did the leaders of Russia, Iran, Bolivia and Venezuela.

Chevron was the first company to produce oil in Angola, starting in 1957. Production grew despite the civil war that erupted after independence from Portugal in 1975 and ended in 2002.

Today, Chevron's sprawling seaside operation at Malongo, a fenced enclave within the enclave of Cabinda that includes massive oil storage tanks, an aging dock, staff housing and greenhouses, is protected by land mines. Alan Kleier, an American who is general manager of Chevron operations for southern Africa, said Chevron was negotiating with the government, which laid the mines, to find other means to protect the property. Cabinda is hedged in between the two Congos and shares no border with Angola.

While Nigerian militants and others in Africa complain that oil companies import staff to do work that could be given to locals, in Angola Chevron boasts that 88 percent of its 6,000 employees are nationals — a percentage the company surpasses only in the U.S. and Europe.

"Of all the places I have worked in around the world, this is one of the most stable settings," said Jim Blackwell, the Angola-based managing director of Chevron's southern Africa operations. He's worked in Afghanistan, Kazakhstan and Nigeria.

Angolan officials "drive a hard bargain but once you strike a deal with them, they do stick to it," Blackwell said.

Bottom of the list

That would give Angola points over Chad, Africa's newest oil producer, which last month threatened to expel Chevron and Exxon Mobil Corp. in a dispute over payments that led to renegotiating a contract drawn up in 2000.

Still, the World Economic Forum last month put Angola at the bottom of a list of 125 countries in a poll measuring business competitiveness. It examined issues such as judicial independence, property rights, government favoritism and corruption. Angola ended up below corrupt and crime-riddled Nigeria, which ranked 101.

Human rights groups charge Angolan officials are hiding oil revenues, making it impossible to know whether money is being stolen or wasted.

Chevron officials said their contracts prohibit them from saying how much they pay the government — a restriction that has hampered years of efforts to bring oil revenues out into the open in countries like Angola and Nigeria, which earn billions from petroleum but whose people live in misery.

Angolan officials argue that they are struggling to turn around a nation nearly destroyed by war. One in four Angolan children does not live beyond five years, and many of those who survive die by 40. Most live on less than $2 a day.

Twice the size of Texas

By conservative estimates, Angola earned $8 billion from oil last year and has a population of just 14.5 million in an area twice the size of Texas.

"The government is getting huge windfalls. Though no one really knows how much they are getting, it's a huge amount that properly dealt with would pay for a proper poverty reduction program," said Sarah Wilkes of Global Witness, which is campaigning for transparency about oil revenues around the world.

The government says it is reforming. A Chevron official pointed a reporter to the Ministry of Finance Web site, where oil figures supposedly are published, but it had outdated material and a link promising a diagnostic study of the oil sector came up blank.

Oilfield services provider Halliburton Co. reports earnings for the fiscal third quarter on Monday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Analysts are expecting strong quarterly results from Halliburton and other oilfield service providers, as hurricane disruptions this year were minimal.

But during this quarter's round of conference calls, investors will likely be more interested in the Halliburton's outlook than its third-quarter results, analysts say.

Oil and natural gas prices have fallen recently, and investors are worried about a possible slowdown in North American drilling, which would hurt oilfield service providers' bottom lines. The Philadelphia Oil Service Sector Index, comprised of Halliburton and 14 other big industry players, has been steadily dropping, down about 23 percent since its peak in early May.

Some analysts expect the index to continue to fall through October and possibly into early November. A very cold winter, which would drain natural gas inventories and spur higher prices, could brighten prospects, analysts say.

In September, Halliburton announced it has nearly completed a $1 billion stock buyback authorized in February and that it approved the repurchase of up to an additional $2 billion, which analysts say should strengthen per-share earnings.

BY THE NUMBERS: Wall Street, on average, forecast quarterly profit of 54 cents per share on revenue of $5.52 billion, according to an analyst poll by Thomson Financial.

ANALYST TAKE: In a recent preview of the industry's third-quarter prospects, Goldman Sachs analyst Daniel Henriques said third-quarter results "should be solid, but it's all about the outlook."

Analysts predict earnings of 58 cents per share in the fourth quarter, and $2.06 for the year.

When Halliburton announced its new buyback authorization in September, Calyon Securities analyst Mark S. Urness said the move should add to earnings per share. But he kept his third-quarter earnings estimate at 54 cents per share because of uncertainty surrounding the timing of the spinoff of the company's KBR engineering and construction unit.

STOCK PERFORMANCE: Halliburton shares fell about 23 percent through the quarter, adjusting for a two-for-one stock split in July. The stock closed the third quarter at $28.45 after ending the second quarter at $74.21. Since then, shares dropped to a new 52-week low of $26.33 on Oct. 4 before recovering some ground to close Thursday at $29.38.

At a time when oil sands developers are complaining about labor shortages and rising costs, John Lau was able to boast on Friday that Husky Energy Inc. has been able to complete its Tucker oil sands project on time and under budget

The Tucker project came in at $470-million — under its $500-million budget — with first oil expected to begin next month.

“We have a very good execution team,” Mr. Lau told investment analysts in a conference call late Friday following release of Husky's third quarter results.

“This is due to our project planning and a full understanding of the economics of these oil sands,” he said, adding that negotiating a fixed cost for the central facility was key.

We are also very close to our upgrader. We've built this project with a lot of certainty.”

Tucker, located 30 kilometres northwest of Cold Lake in northern Alberta, is expected to reach peak production of 30,000 barrels a day within 18 to 24 months.

On Thursday, the Calgary-based company reported third quarter profit of $682-million: a 23 per cent jump driven partly by increased output at the White Rose offshore project off the coast of Newfoundland and Labrador.

Husky has a 72 per cent stake in White Rose, which began producing oil in late 2005. That added 75,000 barrels a day to Husky during the recent quarter.

“White Rose recently demonstrated it can handle 125,000 boe/d,” said Andrew Potter of UBS Investment Research.

Husky's next move in the oil sands is the much larger Sunrise project, near Athabasca, Alta.

Engineering work on that development, which has a potential 200,000 barrels a day, is expected to be complete by the third quarter of 2007.

“The company continues to re-evaluate alternatives for the downstream portions of the project,” said Mr. Lau.

That drew kudos from the investment community.

“We believe Husky's downstream solution (for Sunrise) will offer robust economics versus the majority of Alberta oilsands projects,” said Mr. Potter in a research note.

“We are impressed with Husky's recent exploration successes and long term project slate, particularly in the oilsands,” said Andrew Fairbanks of Merrill Lynch.

The Calgary-based company said late Thursday its latest quarterly earnings amounted to $1.61 per diluted share for the period ended Sept. 30. That compared with profit of $556-million or $1.31 per share in the same period last year.

The results easily surpassed analyst expectations of $1.53 share, according to a survey by Thomson Financial.

Controlled by Hong Kong billionaire Li Ka-shing, Husky Energy is one of Canada's major integrated oil companies.

It has oil and natural gas production, a refining network and a string of gasoline stations, primarily in Western Canada. The company also operates off the East Coast and in the Far East.

Sales and operating revenues in the third quarter, net of royalties, rose to $3.4-billion from year-ago $2.6-billion.

Meanwhile, production in the third quarter rose 20 per cent to 364,700 barrels of oil equivalent output a day, compared with 303,200 barrels in the third quarter of 2005.

Total crude oil and natural gas liquids production rose to 253,200 barrels a day from 190,000 barrels last year.

Husky's shares lost 10 cents Friday to close at $68.01 on the Toronto Stock Exchange.

Schlumberger Ltd., the world's largest oilfield-services provider by market value, said third- quarter profit soared 85 percent to a record as a jump in oil exploration increased demand for its drilling services.

Net income rose to $999.8 million, or 81 cents a share, from $540.8 million, or 44 cents, a year earlier, Schlumberger said today in a statement. It was the fifth-straight quarterly record for the company, which tests oil wells, maps reservoirs and overseas drilling projects. Revenue climbed 34 percent to $4.95 billion from $3.7 billion.

Oil companies seeking to replenish reserves increased exploration from the Gulf of Mexico to eastern Siberia, placing a premium on Schlumberger's technology. Chief Executive Officer Andrew Gould on Sept. 26 forecast double-digit growth for the company through the end of the decade.

``The improvement in profitability was twice what we were looking for,'' said Ole Slorer, an analyst at Morgan Stanley who rates Schlumberger shares ``overweight-attractive'' and owns none. Slorer expected third-quarter profit of 74 cents a share.

With operations extending throughout the world, Schlumberger is likely to weather any reduction in drilling following a decline in oil prices from a record in July, some analysts said.

``Schlumberger as a general proposition makes higher margins and more money outside of the U.S.,'' John Parry, senior equity analyst at oil research company John S. Herold Inc. in Norwalk, Connecticut, said before the statement was issued.

Energy Prices

Crude-oil futures traded on the New York Mercantile Exchange averaged $70.60 a barrel in the third quarter, up 12 percent from a year earlier. Prices touched a record $78.40 a barrel on July 14. Gas futures were down 36 percent at an average of $6.18 per million British thermal units after plunging from a record $15.78 in December.

The drop in gas prices followed a mild winter in North America that left abundant supplies of the fuel in storage at the end of that peak season for demand. In the U.S., inventories rose to a record 3.44 trillion cubic feet last week, a report from the Energy Department showed.

Winter Gas Demand

``This has not yet materially impacted our activity, however if the coming winter fails to stimulate strong natural-gas demand there is a growing likelihood of excess equipment capacity in the pressure-pumping business at some point in 2007,'' Gould, 59, said in the statement. ``Activity growth elsewhere for both oil and gas will remain strong as our customers continue to fight decline curves and bring in new fields.''

Revenue in North America rose 43 percent to $1.35 billion. Falling gas prices and anecdotal evidence of a softening rig market in the U.S. had led some analysts to predict Schlumberger's sales in the region might be hurt. About 30 percent of Schlumberger's business is in North America.

The statement was issued before the start of regular trading on U.S. stock markets. Shares of Schlumberger rose $2.54, or 4.2 percent, to $62.70 yesterday in New York Stock Exchange composite trading. The stock fell 4.7 percent in the third quarter, the best performance among the seven members of the Standard & Poor's 500 Oil & Gas Equipment & Services Index, which dropped 13 percent.

Schlumberger's third-quarter revenue from oilfield services rose 32 percent to $4.3 billion. Revenue from the WesternGeco unit, which uses 3-D seismic imaging to map oil fields, was up 51 percent at $659 million. Schlumberger bought out Baker Hughes Inc.'s 30 percent stake in the joint venture for $2.4 billion in the second quarter.

``WesternGeco was also substantially better than what we were looking for,'' Morgan Stanley's Slorer said. ``The seismic market is a very strong market.''

Gas and oil pipeline operator Valero Energy Corp. on Thursday said it declared a regular quarterly dividend of 8 cents per share.

The company will pay the dividend on Dec. 13 to shareholders of record on Nov. 8.

Shell Canada Ltd. Chief Executive Officer Clive Mather said the company's planned expansion of its oil-sands operations in northeastern Alberta would remain viable should oil prices fall to $30 a barrel.

Soaring costs for the steel pipe, specialized equipment and labor needed for an oil-sands facility, along with a 27 percent drop in crude prices since July, have raised concern that some projects won't be profitable. The estimated cost of the Shell project, a 65 percent expansion of the company's operation, has already tripled.

``I stopped reading the daily oil price,'' Mather, 59, said in an interview yesterday at the company's Calgary headquarters. ``Of course the lower you go, the less attractive the rates of return.'' While short-term fluctuations in prices may affect a decision to drill more gas wells, he said, an investment as large as the oil-sands expansion is based on long-term trends.

His comments contrasted with remarks by Nexen Inc. Chief Executive Officer Charlie Fischer, who this week said new projects may need crude prices of $45 a barrel to break even because of the increased costs that have resulted from the rush to develop the oil sands.

Up to C$125 billion ($110 billion) may be invested in the next decade to almost triple production from Canada's oil sands, according to the National Energy Board. Shell's 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.

Mather, who has run Shell Canada since August 2004, expects partners Chevron Corp. and Western Oil Sands Inc. to give final approval next week for the expansion. ``There is no indication that we have at this stage other than that they are rock-solid with us.''

Rising Costs

Shell Canada, Canada's fourth-largest oil company, 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.

Benchmark crude oil futures peaked at a record $78.40 a barrel on July 14. Oil for November delivery rose 70 cents to $58.35 at 12:30 p.m. today on the New York Mercantile Exchange.

Mather said that for Shell Canada to halt work on the project now would be ``crazy'' because of expenses the company has already incurred or committed to. Still, he hopes some competitors planning to produce heavy oil in Alberta may be discouraged by the cost outlook.

``I'd love everybody to back off,'' he said. While it wasn't pleasant in July to announce the higher cost estimates, he said, ``I did sort of have this macabre thought that maybe one or two people would'' drop their plans for competing projects based on Shell's new estimates.

Eastern Refineries

Shell Canada plans to make a final investment decision this quarter on its planned expansion, which would add 100,000 barrels per day of capacity. The facility today can produce 155,000 barrels per day of bitumen, the sticky crude that is extracted from the sand. The site may eventually extract 550,000 barrels a day, according to Shell. Chevron and Western Oil Sands each own 20 percent of the venture.

First production of raw bitumen from the Athabasca expansion is expected in late 2009, Shell Canada said in July. The upgrader, which processes the bitumen into a product that can be shipped to refineries, is scheduled to start in late 2010. It's being built on the site of Shell's Scotford upgrader near Edmonton, Alberta.

Shell Canada has set up a team of about 40 people to assess the possibility of using its refineries in Montreal or Sarnia, Ontario, to process bitumen. That option is being considered for the output from any future expansion of the Athabasca project or from the properties Shell acquired when it bought BlackRock Ventures Inc. in July for C$2.43 billion.

``There is a clear economic case for this type of investment,'' Mather said, referring to the possibility of sending unprocessed bitumen to the refineries in eastern Canada. A final decision is still ``a few years'' away, he said.

The advantages include proximity to markets in eastern Canada and the U.S. Northeast where gasoline prices are strong. Construction costs might also be lower because the demand for labor, equipment and contractors is less outside of Alberta, Mather said.

Shell Canada shares have fallen 24 percent this year, more than the stock of competitors such as Imperial Oil Ltd., which has declined 6.8 percent. Husky Energy Inc. has gained 16 percent and Petro-Canada has been little changed.

Imperial is Canada's largest oil company by 2005 sales, followed by EnCana Corp. and Petro-Canada. Shell Canada is 78 percent owned by The Hague-based Royal Dutch Shell Plc.

The Energy Department said natural-gas inventories rose 53 billion cubic feet for the week ended Oct. 13. The climb was in line with the estimate from Global Insight, but above the 48 billion increase analysts at Fimat USA expected. Total stocks now stand at 3.442 trillion cubic feet, up 391 billion cubic feet from the year-ago level, and 345 billion cubic feet above the five-year average, the government data said. November natural gas shed 4.7 cents, or 0.7%, to $6.76 per million British thermal units. It traded at a five-week high of $6.91 before the data.

Oil fell 2 percent to below $58 a barrel on Wednesday as a larger-than-expected rise in U.S. crude stocks offset a likely OPEC output cut.

U.S. light crude for November were down $1.18 to $57.75 a barrel by 1754 GMT, adding to losses of $1.01 the previous session. London Brent crude fell $1.08 to

$65.86.

U.S. crude stocks rose 5.1 million barrels last week, the Energy Information Administration said, surpassing analysts expectations for a 1.3 million barrel increase.

Domestic distillate stocks, which include heating oil, fell a larger-than-expected 4.5 million barrels, while gasoline dropped 5.2 million barrels.

"The build in crude was so big it put a damper on the bullish products data," said Nauman Barakat, senior vice president at Macquarie Futures USA.

Ministers from the Organization of the Petroleum Exporting Countries will meet in Qatar on Thursday to clear a deal to remove 1 million barrels from daily output in an attempt to stem oil's drop from a high of $78.40 in July.

Kuwait's energy minister said some hawkish OPEC oil ministers were pushing for an even deeper output reduction.

"They feel that one million may not have any impact on oil prices. That's the thinking of some, I feel this thinking is there, we'll see it when we meet," Sheikh Ali al-Jarrah al-Sabah told Reuters in an interview.

OPEC member Venezuela made a second cut in its oil production this month, slicing a further 50,000 bpd from its output this week after a cut of the same amount on October 1, a senior official with state oil firm PDVSA told Reuters.

Venezuela and Nigeria have led efforts to trim production and halt a rapid decline in oil prices, which hit a 2006-low of $57.22 a barrel last week.

The group is divided on whether it should cut the output from actual production of roughly 27.5 million barrels per day (bpd) or from its nominal 28 million-bpd ceiling, a disagreement analysts say has hurt OPEC's credibility.

"Everyone is taking a wait-and-see attitude with OPEC," said Olivier Jakob of Petromatrix. "They could have a one million barrel cut on paper, but in reality it could be smaller than that."

Occidental Petroleum Corp. posted slightly better-than-expected third quarter profit on Wednesday on higher crude oil prices and a 14 percent increase in oil and gas production levels.

Earnings increased to $1.159 billion, or $1.35 a share, excluding one-time items, from $1.004 billion, or $1.22 a share, last year.

That was slightly higher than the consensus earnings forecast of $1.34 per share for 20 analysts polled by Reuters Estimates, who had a range of $1.275 to $1.40.

Shares in Los Angeles-based Occidental rose as much as 3.2 percent on the New York Stock Exchange before paring gains to $47.01 per share, up 0.63 percent.

Oil and gas segment earnings were $1.877 billion, up 15 percent from $1.638 billion a year ago. That growth was helped by a $273-million increase in realized world oil prices, which rose to $60.52 per barrel from $55.97.

The increase in output lifted the figure by $141 million in the quarter, with production from continuing operations averaging 587,000 barrels of oil equivalent per day (boe/d), up 71,000 boe from the year-earlier period.

That oil and gas increase, however, lagged Occidential's forecast for output of about 609,000 boe/d, because of lower than expected shipments from Libya and maintenance at other fields that cut the figure by 18,000 boe/d, said Stephen Chazen, chief financial officer.

The company forecast fourth quarter output between 610,000 to 620,000 boe/d, although prices had eased from the third quarter.

Each dollar per barrel change in oil prices trims $38 million off earnings before taxes, Chazen said on a conference call, so a $10 reduction would cut income by $380 million and after-tax earnings by $220 million.

The company said it expects gas price realizations in the current quarter to drop by 68 cents per million cubic feet, cutting its income by $32 million from the third quarter.

Capital spending for the current year was expected to total about $3 billion, Chazen said, and would be near steady in the in 2007.

Net income fell to $1.17 billion, or $1.36 per share, from $1.747 billion, or $2.12 per share, a year ago, when it recorded a $726 million pre-tax gain from the sale of its stake in refiner Premcor and Valero Energy.

The year-ago figures were also lifted by a $335 million tax benefit.

Occidental's chemicals business also posted a jump in core earnings to $247 million versus $167 million a year ago, excluding charges that included write-offs for hurricane-related charges.

The chemicals earnings were helped by the increased chlor-alkali volumes and higher margins in chlorovinyls products.

That business was expected to post fourth quarter earnings of about $200 million, Chazen said, as the market entered its traditionally weaker seasonal period.

Oil prices rose Wednesday after U.S. government data showed domestic inventories of gasoline and heating oil fell sharply.

The shrinking fuel supply came as refinery activity fell and a spell of colder weather pushed up demand for home-heating fuels.

The Organization of Petroleum Exporting Countries is scheduled to meet in Qatar on Thursday to discuss production quotas and a possible cut of 1 million barrels. The cartel's intervention would follow a 25 percent decline in oil prices since mid-July.

Light sweet crude for November delivery rose 30 cents to $59.23 a barrel on the New York Mercantile Exchange. In London, December Brent crude on the ICE Futures exchange fell 16 cents to $60.78 a barrel.

In its latest weekly report, the federal Energy Information Administration said gasoline supplies fell by 5.2 million barrels last week to 210.2 million barrels, or 6 percent above year ago levels. Supplies of distillate, which include heating oil and diesel, shrank by 4.5 million barrels to 145.4 million barrels, or 15 percent above year ago levels.

The agency said refinery activity also fell. Refiners ran their plants at an average of 86.3 percent of capacity, a decline of almost 3 percent from the week before.

Crude-oil supplies grew by 5.1 million barrels to 335.6 million barrels, or 7 percent above year ago levels.

Gasoline futures edged up to $1.4650 a gallon on the Nymex, while heating oil fell half a cent to $1.7280 a gallon. Natural gas prices fell 3 cents to $6.410 per 1,000 cubic feet.

The impact of a potential 1 million barrel a day cut by OPEC remains to be seen, with traders eager to see whether the cartel merely reduces its official output quota or reduces production from current levels.

Other major influences on prices in the months ahead will be the economy, the weather and geopolitics, most notably the West's diplomatic dispute with Iran, OPEC's No. 2 producer, over its nuclear ambitions.

Oil hovered near $59 a barrel on Wednesday as traders awaited an OPEC meeting likely to seal a deal to cut output, while weighing an expected rise in already bulging crude oil stocks in the United States.

U.S. light crude for November stood 3 cents higher at $58.96 a barrel by 0716 GMT, after falling $1.01 or 1.7 percent a day ago, ending a three-day rising streak. London Brent crude climbed 7 cents to $61.01.

"The market has its eye on the U.S. oil stocks data... but more importantly, it is also waiting to see if there is going to be something definitive on the production cuts," said U.S.-based analyst Phil Flynn with Alaron Trading.

Ministers from the Organization of the Petroleum Exporting Countries are scheduled to meet in Qatar on Thursday to clear a deal to remove 1 million barrels from daily output in an attempt to stem oil's drop from a high of $78.40 in July.

But the group has been divided on whether it should cut the output from actual production of roughly 27.5 million barrels per day (bpd) or from its nominal 28 million-bpd ceiling, a disagreement analysts say has hurt the cartel's credibility.

Thursday's meeting may also provide the first public comment from the world's top producer, Saudi Arabia, which has thus far been silent on the proposed curbs.

Two weeks ago a senior OPEC delegate said the kingdom would cut output by about 300,000 bpd, but its state oil company Aramco told refiners in Europe and Asia last week that it would not cut back their supplies for November. Oil majors, however, will receive a 5 percent reduction.

"The market needs to hear from Saudi Arabia," Flynn said.

Analysts said brimming U.S. crude stock levels, which last week stood almost 7 percent higher than a year ago, were limiting any potential recovery in prices ahead of the winter. Oil hit a 2006-low of $57.22 a barrel last week.

U.S. crude stocks are likely to have risen by 1.3 million barrel last week, while distillate stocks -- including heating oil -- were seen falling by 650,000 barrels, according to a Reuters survey ahead of data due later on Wednesday.

Gasoline stocks were seen falling by 270,000 barrels.

On Tuesday, private weather forecaster, EarthStat Energy WeatherWinter, said the U.S. winter was likely to be 5 percent colder than last year's mild season, giving possible rise to higher demand for winter fuels.

Independent oil and gas explorers and producers benefited from higher oil prices during the third quarter, but it may not be enough to offset cascading natural-gas prices and higher costs, analysts say.

Oppenheimer & Co. analyst Fadel Gheit wrote in a recent research report that about half of the independent explorers and producers could produce earnings gains over year-ago levels, while the other half could show declines. Gheit, though, expects most to report modest declines from the second quarter.

Occidental Petroleum Corp. kicks off the industry's earnings season Wednesday. Most of its competitors, though, won't follow until next week, with many earnings reports tightly banded around Nov. 1. Apache Corp., for example, reports on Oct. 26, and Devon Energy Corp. releases its earnings on Nov. 1.

For the overall industry, Gheit said third-quarter crude oil prices were up 12 percent from year-ago levels, while natural gas was 24 percent lower. Compared with the second quarter, crude prices were flat and natural gas prices slightly lower.

Crude prices spiked during the quarter, as geopolitical tensions increased with fears of Iranian nuclear ambitions and Israel's battle in Lebanon.

Natural gas prices fell in the quarter as minimal hurricane disruptions meant gas storage inventories grew to "historically high levels," Deutsche Bank's Shannon Nome wrote in a recent report.

On the cost side, Bank of America analyst Robert S. Morris wrote in a recent report that per-unit costs rose from year-ago levels. But they may be flat, compared with the previous quarter, for the first time in three years.

Oil prices fell Tuesday as traders awaited fresh supply data from the U.S. government and a clearer message from OPEC, which meets later this week.

Light, sweet crude for November delivery declined by 44 cents to $59.50 a barrel on the New York Mercantile Exchange. On Monday, the contract jumped $1.37, in part because of soaring natural gas futures prompted by forecasts calling for colder weather.

Societe Generale's director of commodity strategy Michael Guido said there hasn't been significant buying any time crude futures rise above $60 a barrel and that he expected prices to tread water until Thursday's OPEC meeting.

Guido said if the Organization of Petroleum Exporting Countries formally announces a 1 million barrel-a-day production cut - a move that has been rumored for more than a week - it won't necessarily send prices higher.

"In my opinion, the OPEC cut has already been digested by the market," he said.

One factor that could give the market some direction is the weekly supply report due out Wednesday by the U.S. Energy Information Administration, a division of the Energy Department.

Analysts surveyed by Dow Jones Newswires expected weekly petroleum inventories data to be released Wednesday to show a decline of 900,000 barrels in distillate stocks, which include heating oil.

U.S. weather forecasts for a cold blast to hit the Rockies and below-normal temperatures in much of the eastern two-thirds of the country later this week led to a 14 percent jump in natural gas futures Monday.

In London, Brent crude for December delivery on the ICE Futures exchange traded at $61.80 a barrel, up 14 cents.

The impact of any OPEC cut remains to be seen, with traders eager to see whether OPEC merely reduces its official output quota or reduces production from current levels, which are already slightly below the quota.

The last time OPEC reduced its output - also by 1 million barrels a day - was December 2004 when oil traded slightly above $40 a barrel.

Since a mid-July high of $78.40 a barrel, the price of crude oil has dropped by about 25 percent due to rising global inventories, concerns about slowing economic growth and a milder-than-anticipated hurricane season.

In other Nymex trading, heating oil futures fell by less than a penny to $1.7512 a gallon while gasoline prices fell by 1.37 cent to $1.478 a gallon. Natural gas futures climbed 2.6 cents to $6.47 per 1,000 cubic feet.

Crude oil rose for a fourth day, trading above $60 a barrel in New York as Kuwait's oil minister said OPEC will cut production amid high U.S. inventories.

The Organization of Petroleum Exporting Countries, which pumps 40 percent of the world's crude, agreed to reduce supplies by 1 million barrels a day from actual production, Kuwait Oil Minister Sheikh Ali-Jarrah al-Sabah said today. OPEC members will gather Oct. 19 in Doha, Qatar, to ratify the agreement, he said.

``Only small producers have talked'' about trimming production, said Michael Palatiello, head of strategy at Wings Partners in Milan. ``The real benchmark will be Saudi Arabia.''

Crude oil for November delivery rose as much as 59 cents, or 1 percent, to $60.53 a barrel in after-hours trading on the New York Mercantile Exchange. It traded at $60.48 at 12:22 p.m. London time. Prices have rebounded from a 10-month low of $57.22 on Oct. 12. Brent crude oil for December settlement advanced 78 cents to $62.44 a barrel on the London-based ICE Futures exchange.

U.S. crude oil inventories probably rose for a third consecutive week last week as refineries shut units for maintenance, a Bloomberg News survey showed. Supplies probably gained 1.5 million barrels in the week ended Oct. 13, from 330.5 million the prior week, according to the median of forecasts by four analysts before an Oct. 18 Energy Department report.

U.S. crude inventories rose above seasonal averages after the summer driving season ended and hurricanes missed rigs in the Gulf of Mexico this year.

Quota, Production

The 10 OPEC members with quotas pumped 27.6 million barrels a day last month, according to Bloomberg News estimates. The group's official production target, which excludes Iraq's output, is 28 million barrels a day.

``It looks like the reduction will be from current production levels, not from the formal quota,'' said Tobias Merath, commodity strategist at Credit Suisse in Zurich. ``This means there could be a steeper reduction than initially was envisaged,'' as OPEC is already pumping less than its target.

The OPEC crude oil basket price rose 44 cents to $55.34 a barrel yesterday, the group said in an e-mail today. The daily price index is a weighted average of 11 crude blends produced by OPEC states. New York-traded crude has fallen about $18 a barrel from a record high July 14.

The price of oil has advanced for three consecutive days in part because cold weather in the U.S. is increasing heating demand. The Buffalo, New York, area was blanketed under a record- setting 2 feet of snow, knocking out power to more than a quarter- million residents on Oct. 13.

U.S. Chill

``Lower temperatures in the U.S. and the heating demand are pulling up oil prices,'' said Kazuhiko Saito, a commodity strategist at Interes Capital Management in Tokyo.

Demand for heat will be 18 percent higher than average during the next seven days in the northern Midwest, according to researcher Weather Derivatives in Belton, Missouri.

November heating-oil futures gained 2.7 cents, or 1.5 percent, to $1.7835 a gallon at 12:05 p.m. London time.

Lower-than-normal temperatures are predicted for most of the U.S. next week, according to an outlook from government forecasters that covers Oct. 21 through 25. The forecast predicts the coldest temperatures will be in the northern Plains and Midwest.

U.S. gasoline at the pump fell 3.5 cents to a nationwide average of $2.226 a gallon in the week ended yesterday, according to the report from the U.S. Energy Department. Prices were 49.9 cents a gallon lower than a year ago.

Prices have declined from their high for the year of $3.038 a gallon on Aug. 7 because of higher-than-normal U.S. inventories and the falling price of crude oil, which accounts for 55 percent of gasoline's pump price.

Gasoline Impact

``Oil prices seem to have found a floor relative to the decline of recent weeks,'' analysts at Citigroup Global Markets Ltd, including James Neale and Mark Bloomfield in London, said in a report yesterday. ``Like the tail wagging the dog, gasoline has been known to exert a material impact on oil prices on numerous occasions.''

The average price for unleaded gasoline at the pump in the U.S. was $2.223 a gallon yesterday, about 53 percent lower than a year ago, according to the American Automobile Association, the nation's largest car club.

Gasoline for November settlement rose 1.78 cents to $1.55 a gallon in New York at 12:21 p.m. in London.

Analysts are expecting solid results from oilfield service providers in the third quarter, a result of minimal hurricane disruptions this year.

But during this quarter's round of conference calls, investors may pay more attention to future outlooks than the third-quarter results, analysts said.

Oil and natural gas prices have fallen recently, which spurred investor fears of a slowdown in North American drilling. The Philadelphia Oil Service Sector Index, comprised of 15 of the industry's bigger players, has been steadily dropping, down about 22 percent from its early May peak. Some analysts have said they expect the index to continue to fall through October and possibly into early November.

Noble Corp. kicks off the earnings season on Thursday, and Schlumberger Ltd. follows on Friday.

RBC Capital Markets analyst Kurt Hallead said he doesn't expect to see as many "blow-out" earnings reports as in recent quarters.

Morgan Keegan analyst J. Michael Drickamer said in a recent report, "we believe that 3Q:06 earnings will be at least as good as expected and given the lack of hurricane disruptions, earnings across the oilfield services industry stand a strong chance of being better than expected."

He expects North American drilling activity to "pause" in 2007, but he doesn't think it will lead to a cyclical downturn. The pause, he said, will allow excess natural gas inventories to deplete. The falling inventories would then encourage further drilling.

Shell Oil Co. has no plans to cut back on its investments in energy exploration projects because of the steep drop in crude oil prices, the company's president said on Monday.

The price for U.S. oil traded at the New York Mercantile Exchange has fallen from just over $78 a barrel in mid-July to around $59 on Monday.

John Hofmeister, the president of Shell Oil, which is the U.S. unit of Royal Dutch Shell Plc, said his company would continue with its planned energy projects, including expensive drilling in the deep waters of the Gulf of Mexico, even if the oil price fell to half the current level.

"Between, $20 and $40 we're robust, and so we wouldn't need to rethink (our investments) now," Hofmeister told reporters on the sidelines of the American Petroleum Institute's annual meeting.

"We're always looking at these (oil prices). And we may make changes in priorities, but at this point we're full steam ahead. We're looking forward to next year," Hofmeister said.