Updated from 3:39 p.m. EDTOil prices fell Thursday after the government reported a slightly larger-than-expected rise in U.S. crude inventories last week. Crude for November delivery closed down $1.04 to $63.08 a barrel, following Wednesday's close of $64.12. Heating oil fell 2 cents to $1.99 a gallon, while gasoline was down about 7 cents to $1.76 a gallon. Natural gas was down about 42 cents to $13.11 per million British thermal units. "We've been up for the past couple of days so we're due for a bit of a setback," said Bill O'Grady, Assistant Director of Market Analysis at A.G. Edwards. "If you draw a regression line from the August highs, you're in a down channel." According to the Energy Department, crude oil inventories rose by 1 million barrels last week, about 100,000 more than expected. Distillate stocks slid by 3.4 million barrels and gasoline stock fell by about 2.7 million barrels; both were about twice the expected decline. Crude fell "on data I didn't think was all that bearish," O'Grady said. The report also showed a drop in demand for gasoline and distillate fuels. "We don't know why consumers are demanding less diesel, gasoline and jet fuel," O'Grady said. "As refineries come back on stream, if the demand remains down, prices could be facing some significant headwinds going forward." On Wednesday, the EIA said Wednesday that households heated primarily with natural gas are expected to spend $350, or 48%, more on fuel this winter than last year. Households heating primarily with oil can expect to pay an average of $378, or 32%, more this winter. "There's no secret here," O'Grady said. "They didn't tell us anything we didn't already know. (But) the way the world works, there's a dearth of well-informed people out there so this tends to make big news." The U.S. Labor Department said the number of people who have lost their jobs because of Hurricanes Katrina and Rita jumped to 438,000 last week, according to the Associated Press. The department said an additional 75,000 hurricane-related claims were filed last week out of a nationwide total of 389,000 new claims for unemployment benefits. The U.S. Minerals Management Service said Thursday the Gulf of Mexico's shut-in oil production was about 1 million barrels of oil per day, or the equivalent of 68.8% of the gulf's daily oil production. The shut-in gas production was 5.7 billion cubic feet per day, or about 57% of the gulf's daily gas production.