Updated from 11:53 a.m. EDT

Oil prices fell Monday, closing just above $60 a barrel, as Hurricane Wilma blew ashore in Florida with 105-mph winds and raised the possibility of further pressure on energy demand.

Crude for December delivery closed down 31 cents to $60.32 a barrel.

Heating oil dropped about 6.7 cents to $1.80 a gallon, and unleaded gasoline fell 5.5 cents at $1.58 a gallon. Natural gas rose 13 cents to $13.00 per million British thermal units.

"This is a kind of post-storm hangover," said Phil Flynn, senior market analyst at Alaron Trading. "A lot of times these storms have a tendency to blow the market up and down and all around, and we're seeing that here today. The market gets caught up in the storm and it's going to be whipped around a little bit."

The National Hurricane Center said Monday afternoon that Wilma regained its Category Three status off the east coast of Florida and packing maximum sustained winds of 115 mph. At last report, the eye of the storm was 125 miles northeast of West Palm Beach, Fla., moving toward the northeast at about 29 mph.

Flynn said many traders are worried the storm will hurt demand rather than supply. They're concerned, he said, that the storm will create a "hunker down" mentality where tourists scrap their travel plans.

"I don't happen to believe that," he said, "but I think the markets have been carrying this mantra of demand destruction. You have to keep in mind that demand at this time of the year is weak anyway. I think demand is going to bounce back a lot faster than people think, especially if prices continue to fall. It could be the catalyst to get demand to rise again."

The latest storm caused some slowdowns in the Gulf of Mexico, where refineries are coming back on line after the twin blasts of Hurricanes Katrina and Rita.

The U.S. Minerals Management Service said Monday's shut-in oil production was about 1 million barrels of oil per day, the equivalent to 67.90% of the gulf's daily oil production. The shut-in gas production was 5.472 billion cubic feet per day, the equivalent to 54.72% of the gulf's daily gas production.

In company news, CIBC World Markets upgraded Duke Energy ( DUK) from sector perform to section outperform. Wachovia downgraded Enbridge Energy ( EEP) from market perform to underperform. Jefferies & Co. downgraded PG&E ( PCG) from buy to hold.

P/>Houston-based Atwood Oceanics ( ATW) said it sold its spare blowout preventer stack to Norwegian company for about $15 million, which will result in an after-tax gain of roughly $6 million, or 38 cents a share.

The market was looking up for the big energy market players in recent trading. ConocoPhillips ( COP) was up $1.88 to $60.03. Chevron ( CVX) was up $1.03 to $57.33. Exxon Mobil ( XOM) was up $1.25 to $56.62. And BP ( BP) was up 66 cents to $64.94.

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