Updated from 12:23 p.m. EST

Crude prices closed below $60 a barrel Monday amid milder temperatures in the Midwest and a belief that the window is closing on hurricane season.

December crude finished down $1.47 to $59.75 a barrel. On Friday, the contract added 13 cents to $61.22 a barrel.

"Probably the biggest surprise was that we didn't get much of a bounce at the end of the day," said Phil Flynn, senior market analyst at Alaron Trading. "It seemed to be kind of a wash-out on light volume. There didn't seem to be a lot of appetite for picking a bottom just yet."

Unleaded gasoline fell 9.81 cents to $1.53 a gallon and natural gas dropped 85 cents to $12.20 per million British thermal units. Heating oil dropped 7.37 cents to $1.77 per gallon.

Flynn noted concerns about the U.S. supply of distillates, which he said are below average for this time of year. He said refineries have stepped up their gasoline production at the expense of distillates.

"We continue to lose ground," Flynn said. "If we get some early cold weather, we could be facing some issues on the heating oil front."

James Williams, energy economist at WTRG Economics, was a little more positive. He said U.S. distillate inventories are actually slightly higher than last year at this time. Compared with the five-year average, Williams said, the current distillate inventory is about 2.3% light, not a huge cause for alarm.

"The refineries in the Gulf of Mexico are coming back on line," he said. "Barring the usual caveats, I think we'll be OK."

On the international scene, the Associated Press reported that the Organization of Petroleum Exporting Countries said it has "more than adequate" spare capacity to cover expected global demand this winter. Flynn, however, said some people have expressed doubts about OPEC to actually deliver on its promises.

"There's still a big debate," Flynn said. "There's more than one group of people questioning the Saudis' ability to expand capacity.

"It's always nice to talk about slowing demand in October when there isn't any demand," Flynn added. "If you go back to last year, (OPEC) was talking about slowing demand in October and then cutting production in December."

The recovery of storm-battered refineries in the Gulf of Mexico continues. The U.S. Minerals Management Service said Monday's shut-in oil production was 1.02 million barrels of oil per day or the equivalent to 67.72% of the gulf's daily oil production. The shut-in gas production was 5.427 billion cubic feet per day, the equivalent to 54.27% of the gulf's daily gas production.

In company news, Valero ( VLO) reported third-quarter earnings that beat analysts' expectations. The San Antonio, Texas, refiner made $1.28 billion, or $4.37 a share, for the quarter ended Sept. 30, up from the year-ago $431 million, or $1.57 a share. Revenue rose to $23.3 billion from $14.3 billion a year earlier. Analysts surveyed by Thomson First Call had been looking for a $4.23-a-share profit on revenue of $18.96 billion.

The company also said Bill Greehey will step down as CEO at the end of the year to focus on his responsibilities as chairman. He will be succeeded as CEO by Chief Operating Officer Bill Klesse.

Occidental Petroleum ( OXY) said its third quarter earnings more than doubled. The company earned $1.75 billion, or $4.32 a share, in the quarter, compared with $758 million or $1.91 a share, a year ago. Before items, Occidental's "core" earnings rose 43% from a year ago to $1.09 billion, or $2.69 a share. Analysts surveyed by Thomson First Call were expecting earnings of $2.63 a share.

Norwegian oil company Statoil ( STO) reported a third quarter net profit of 8.7 billion kroner or $1.35 billion, compared to 5.8 billion kroner in the year ago period.

It was a mixed bag for some of the other big energy market players. ConocoPhillips ( COP) was up $2.28 to $65.54. Chevron ( CVX) was down 21 cents to $57.17. ExxonMobil ( XOM) was up marginally to $56.38. Burlington Resources ( BR) was up nearly a penny $72.45.

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