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Oil Down, Exxon's Profits Up

Crude slips but the energy giant produces the second-highest profit ever for a public company.

Updated from 10:59 a.m. EDT

Oil futures slipped below $61 Thursday as traders cashed in their positions and took profits after the contract touched nearly a four-week high the previous day and inched up early in the session.

After trading as high as $61.79 intraday, light, sweet crude for December delivery settled down $1.04 at $60.36 a barrel on Nymex. The rest of the energy sector followed oil lower, with heating oil losing 1 cent to $1.70 a gallon, and unleaded gasoline dipping 1 cent to $1.56 a gallon.

On Wednesday, crude soared $2.05 to $61.40 after crude supplies unexpectedly fell last week and Iran said it would also trim exports as part of OPEC's 1.2-million-barrel daily production cut.

Saudi Arabia, Iran and the United Arab Emirates have all agreed to reduce output next month as part of OPEC's move to trim exports by 1.2 million barrels per day. Taken together, the three countries' cuts represent a drop of 660,000 barrels per day. The other eight members have yet to say whether they will follow the move.

Traders and analysts are not sure whether the other members will follow those countries' leads because they would stand to lose millions in oil revenue.

An unexpected drop in crude supplies last week also boosted the effect of the OPEC cut and pushed up prices. Inventories plummeted by 3.3 million barrels because of the shutdown of the Louisiana Offshore Oil Port for three days last week,

Reuters

reported. The closure of the country's largest import facility shaved imports and led to the drop in supplies.

But inventories and production of gasoline and distillates may once again rise this week, now that the facility has reopened. Last week, gasoline stockpiles plunged by 2.8 million barrels, and distillates dropped by 1.4 million barrels. Still, fuel in storage is 4% to 14% higher than last year.

Cooler temperatures and higher heating demand have limited the increase in natural gas inventories.

Natural gas stockpiles rose by 19 billion cubic feet to 3.46 trillion cubic feet last week, according to the U.S. Energy Department's weekly update released earlier this morning. Analysts polled by

Bloomberg

had expected an increase of 28 billion cubic feet. There is now 11% more natural gas in storage than at this time last year and 10% more than the five-year average.

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Increased supplies sent natural gas prices down by 19 cents to $7.49 per million British thermal units.

In stock market action,

Exxon Mobil

(XOM) - Get Exxon Mobil Corporation Report

and

Royal Dutch Shell

(RDS-A)

were attracting much of the attention after reporting third-quarter results. Exxon shares were recently 0.9% higher at $71.67, and Shell was climbing 2.4% to $69.29.

Exxon Mobil clocked in the second-highest profit for a public company ever, earning $10.4 billion, or $1.77 a share during the third quarter vs. analysts expectations of $1.59. Profits were up 6% over last year. Yet revenue slipped from $100.7 billion last year to $99.5 billion.

Shell's profit fell to $6.95 billion in the third quarter vs. $7.2 billion a year ago. Sales came in at $84.2 billion, up from $76.4 billion during the same period last year.

Apache Energy

(APA) - Get Apache Corporation Report

saw its net income dip 6% in the third quarter to $647 million, or $1.94 a share. Downed production in the North Sea, a sale of a Chinese field and lower natural gas prices contributed to the drop in profits. Sales climbed from $2 billion last year during the quarter to $2.26 billion this year.

Apache shares were last declining 1.1% to $68.17.