Updated from 1:50 p.m. EDT

Energy prices rebounded sharply Tuesday as bulls continued to defend the $60-a-barrel support level.

Crude for December delivery closed up $2.12 to $62.44 a barrel, after falling 31 cents to $60.32 Monday. Heating oil rose 9.3 cents to about $1.90 a gallon and unleaded gasoline jumped 7.1 cents to $1.65 a gallon.

"We basically saw short-covering in all the energy futures markets," said Tim Evans, senior analyst at IFR Markets. "They're feeding off each other."

Evans said that while crude futures have dipped below $60 a barrel in each of the three previous sessions, they have yet to close below it.

"People are reading that as a message that there's an absolute floor under this market," he said, "and it can never go any lower. That's a false impression. It's a short-term impression and it's brought short covering into the market."

Natural gas spiked Tuesday, closing up $1.35 to $14.35 per million British thermal units. Evans said many people mistakenly thought prices would fall once the threat of Hurricane Wilma faded. In addition, he said, the November contract options expire Wednesday and the futures expire on Thursday.

"There's an element of chaos," he said, "an element of time pressure that's contributing to a spike in price. There's not been any real change in the underlying fundamentals here. We did not suddenly decide we're going to have an ice age this winter.

"Glaciers are not descending through the Hudson Valley. Wooly mammoths have not been sighted in Central Park."

Evans said the loss of gas production in the Gulf of Mexico has not translated to a deficit in storage.

"Our simple, fair-value model says that when there's an average inventory," Evans said, "we should have an average price. We currently have average inventory and we have a price 260% above average. Is that sustainable? I don't think so."

Storm-battered refineries in the Gulf of Mexico continue to come back on line. The U.S. Minerals Management Service said shut-in oil production was 1.03 million barrels of oil per day, the equivalent to 68.91% of the gulf's daily oil production. The shut-in gas production is 5.582 billion cubic feet per day, or the equivalent to 55.82% of the gulf's daily production.

In company news, FirstEnergy ( FE) said warmer-than-normal weather and higher demand for power helped increase third quarter profits by 11%. Net income rose to $332.4 million, or $1.01 a share, from $298.6 million, or 91 cents in the year ago period. Revenue increased from $3.4 billion to $3.6 billion. Also, Jefferies & Co. upgraded the Akron, Ohio-based company's stock from hold to buy.

Offshore drilling contractor Ensco International ( ESV) reported third quarter net income of $76.5 million or 50 cents a share, on revenues of $276.7 million. This includes a $4 million charge, or 3 cents a share, for Ensco's estimated insurance deductible related to two rigs damaged by Hurricane Katrina. A year ago, Ensco reported net income of $25.8 million, or 17 cents per diluted share, on revenues of $187 million.

Drilling contractor Nabors Industries ( NBR) said third quarter net income rose to $178.9 million, or $1.11 per share, including per-share charges of 3 cents due to hurricane damage. This compares to $75.6 million, or 48 cents per share, in the year ago period. Revenue rose to $920.5 million from $597.6 million in the same period last year.

Oil-service company Halliburton ( HAL)reported a third-quarter profit late Monday, but the company's top line missed Wall Street estimates. The company said that it earned $499 million, or 95 cents a share. A year earlier, the company lost $44 million, or 9 cents a share, due largely to an asbestos and silica settlement.

Analysts polled by Thomson First Call had expected the company to earn 82 cents a share. Revenue rose 6% from a year ago to $5.1 billion. The top-line results were slightly below the Thomson First Call consensus expectations of $5.24 billion. Shares of Halliburton were down $2.07 recently to $59.02.

BP ( BP) posted a third-quarter profit but warned that volatile energy prices are punishing retail gasoline margins. The company made $6.46 billion, or $1.26 an American depositary share, up from the year-ago $4.82 billion, or $1.05 a share. Revenue rose to $97.7 billion from $66.7 billion.

It was a mixed bag for some of the other big energy market players in recent trading. ConocoPhillips ( COP) was up $1.92 to $62.22. Chevron ( CVX) was up 96 cents to $58.79. Exxon Mobil ( XOM) was up 38 cents to $57.23.