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Oil Falls Back Below $66

Natural gas rises again.

Updated from 3:40 p.m. EDT

Oil futures closed down Monday as traders continued to size up the effect two recent hurricanes in the Gulf of Mexico will have on shipments of petroleum products.

Crude oil for November delivery closed down 77 cents to $65.47 a barrel in Nymex trading. Natural gas finished up 10 cents to $14.02 per mmBtu.

Unleaded gasoline futures closed down 3 cents at $2.06 a gallon, and heating oil lost about 4.9 cents to about $2.09 a gallon.

"We had all weekend to be worried," said Phil Flynn, senior market analyst at Alaron Trading. "And when we came in on Monday morning there was no new news to keep us worried."

The U.S. Minerals Management Service said nearly 93% of the daily oil production in the Gulf is shut down because of hurricanes Katrina and Rita. The agency said about 75% of the area's gas production is shut in.

"Ninety-three percent is better than 100%," Flynn said. "But it's still a huge number. This report shows there are still some significant challenges in getting the Gulf back to normal. But the longest journey begins with a single step."

The hurricane season is not over. Weather forecaster Dr. William Gray of Colorado State University said October could see three more hurricanes, with one of them classified as a major hurricane, which would mean winds of at least 111 mph.

Shares of major oil companies rose earlier, but


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Exxon Mobil

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all lost their gains by the time the closing bell sounded.

ConocoPhillips said about 20,000 barrels of oil equivalent production a day has been lost because of storms. The company's average crude oil refining capacity utilization rate for the third quarter will probably be in the mid-90% range, mainly because of the impact of hurricanes Katrina and Rita.

The company's 247,000-barrel-a-day Alliance refinery in Belle Chasse, La., remains shut down. ConocoPhillips expects the refinery to begin partial operation in December and return to full operation early next year.

The Sweeny, Texas, and Lake Charles, La., refineries were closed in anticipation of Hurricane Rita. Sweeny's business has returned to normal, and Lake Charles should resume operations in mid-October.

Elsewhere on the corporate side of the energy sector,

Reliant Energy


reached an agreement to sell three New York City power plants to an investor group led by Madison Dearborn Partners and US Power Generating for $975 million.


NRG Energy

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agreed to buy Texas Genco LLC for about $5.8 billion.

W&T Offshore

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said five of its platforms had been damaged by Hurricane Rita. The Houston-based company is evaluating alternative methods for bringing shut-in production online. W&T said it has insurance coverage for property damage, but the company doesn't carry business interruption insurance.



said it completed the sale of its interests in a group of North Sea assets for about $566 million. Also,

Enbridge Energy Partners


estimated its net losses caused by Hurricane Rita will be about $2 million. Enbridge owns the U.S. portion of the world's longest liquid petroleum pipeline.

Diamond Offshore Drilling

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saw its shares gain 2.7% after Banc of America Securities upgraded its stock from neutral to buy.