Updated from 12:44 p.m. EDT

Oil prices fell to a five-week low Tuesday as traders weighed evidence of slowing global demand against continuing production disruptions in the Gulf.

The crude contract for October delivery closed down 23 cents to $63.11 a barrel on Nymex, its sixth loss in seven sessions. The contract is more than $7 below the record high of $70.85 reached immediately after Hurricane Katrina hit the U.S. Gulf Coast.

Gasoline futures, which also fell back to pre-Katrina levels, were up 1 cent to $1.89 a gallon.

Recent forecasts for a drop in U.S. and global fuel consumption were further supported by news that China's crude oil imports fell by 6.1% in August, compared to last year, wire reports said.

China's crude product imports declined by 11.7% in August compared to the year-ago period, indicating that consumption in the world's second largest oil consumer has been dampened by high costs.

Wenchao Su, China oil analyst at Energy Security Analysis Inc., said that imports fell in China because the independent refiners, which represent 10% of the country's refining capacity, reduced production.

"The Chinese government in still capping gasoline retail prices, which means independent refiners, which have a smaller scale and higher costs, cut down on their crude purchasing," Su said.

In a separate note, Su said that Chinese demand has grown in the first half of this year by 7%, significantly slower than the 17% growth rate seen last year.

The slowdown in Chinese demand growth, according to Su, is due to a combination of decelerating vehicle sales, consumer sensitivity to higher fuel costs, and reduced consumption of gasoil and fuel oil by the power sector due to higher prices.

Bolstering the bull case in the U.S. is the unsolved problem of tight refining capacity, which got even tighter after Katrina blew away 5% of refined production.

Roughly 60% of Gulf of Mexico oil and gas production remains offline amid a massive assessment and repair effort.

Traders will be focusing on Wednesday's inventory report to determine the extent to which refiners were able to compensate for lost production. Last week, the government's report showed gasoline inventories fell after Katrina by a smaller amount than feared.

In company news, BP's ( BP - Get Report) petrochemical unit Innovene filed to raise up to $1 billion in an initial public offering. The Chicago-based company plans to trade on the New York Stock Exchange under the ticker symbol "INV."

Elsewhere, EnCana ( ECA - Get Report) said Tuesday it plans to sell all of its assets in Ecuador for $1.42 billion, which is roughly the investment book value. The assets produce 75,000 barrel of oil a day and have 143 million barrels of proven oil reserves.

Shares of W&T Offshore ( WTI - Get Report) fell for a second day after the oil and gas producer said it will defer 7% of its previously anticipated production in 2005 due to the storm. The company revised its full year production guidance to a range of 76.9 to 81 billion cubic feet of oil equivalent, down from its previous guidance of 83.1 to 87.4 billion. W&T Offshore shares fell 64 cents, or 2%, to $31.10.

Meanwhile, shares of El Paso the natural gas pipeline company, jumped 6% after it was raised to overweight from equal weight at Lehman Brothers.

In a note to investors, Lehman analyst Richard Gross noted that El Paso stands to benefit from increasing commodity prices, "improving its ability to pay down debt or perhaps invest in additional properties."

Natural gas prices remain near record highs, recently trading at $10.9 per thousand cubic feet.

Shares of Southwestern Energy ( SWN - Get Report) rose 6% one day after the company said it plans to sell 7.3 million common shares to the public to fund exploration in the Fayetteville Shale area of Arkansas.

An analyst close to the deal, who requested anonymity, believes the company's shares are being bid up by investors concerned they won't get enough shares. He also noted that in its annual analyst meeting Tuesday, EOG Resources ( EOG), an independent gas explorer renown for its expertise in Shale plays, expressed "favorable comments" on Southwestern's prospects in the Fayetteville Shale, which probably also helped boost its shares.