Updated from 1:10 p.m. EST

Oil backed away from its highest price in a week Friday, as warm weather and refinery recoveries continued.

December crude closed down $1.20 to $60.58 a barrel, after rising $2.03 on Thursday. Unleaded gasoline fell 1.88 cents to $1.61 a gallon, while natural gas futures dipped 27.4 cents to $11.42 per million British thermal units. Heating oil fell 3.74 cents to $1.80 per gallon.

"It looks like a good time for bear hunting," said James Williams, energy economist at WTRG Economics. "Following yesterday's move, I would expect the market to go down."

Williams cited government reports of improved crude oil stocks, warmer-than-normal weather, and the continuing recovery of storm-battered refineries in the Gulf of Mexico.

"We're starting to return to normal gasoline consumption patterns as gasoline prices are dropping," Williams said. "The question is will there be any long-term effect if people decide to pay attention to how much they drive."

The U.S. Minerals Management Service said Friday's shut-in oil production was 780,633 barrels of oil per day, the equivalent to 52.04% of the gulf's daily oil production. Friday's shut-in gas production was 4.569 billion cubic feet per day, the equivalent to 45.69% of the gulf's daily gas production.

"At this time of the year, heating oil really pushes the market," Williams said. "Gasoline stocks are normal levels, but distillate stocks are at the bottom of the normal range. The Northeast demand in particular kind of dominates the market from now until at least January."

In addition, Williams noted that the strike at three Royal Dutch Shell ( RDS.A - Get Report) production facilities in the Netherlands was called off Thursday.

"I don't see any bullish news on the horizon," Williams said.

John Browne, chief executive of BP ( BP) seemed to have a similar view point. Bloomberg reported that during a speech in Singapore, Browne said crude oil prices were "unsustainably high" and may fall to $40 a barrel, though he did not mention a time-frame. Crude oil futures reached a record $70.58 in August.

Citigroup downgraded Tesoro Petroleum ( TSO) from buy to hold. And Jefferies & Co. downgraded Vintage Petroleum ( VPI) from buy to hold.

Houston-based energy company Noble Energy ( NBL) posted third-quarter net income of $177 million, or 99 cents a share, compared with $83.7 million, or 70 cents a share, a year ago. Revenue more than double to $645.2 million, the company said.

Independent oil and gas company KCS Energy ( KCS) posted third-quarter earnings of $24.5 million, or 49 cents a share, compared with $18.8 million, or 38 cents a share, a year ago. Excluding charges, net income would have been $31.4 million, or 62 a share. Revenue rose to $101.7 million, up from $53 million from a year ago.

It was a down day for some of the other big energy market players. ConocoPhillips ( COP) was down $2.16 to $66.01. Chevron ( CVX) was down $1.63 to $57.85. Exxon Mobil ( XOM) was down 62 to $57.95. Burlington Resources ( BR) was down $2.71 to $72.19.