WASHINGTON -- The supply fears that dominated energy-market psychology in the aftermath of Hurricane Katrina receded somewhat yesterday as attention turned to expectations of softening demand.
Futures prices for crude oil, gasoline, and heating oil fell.
''As much as Katrina has taken supply off the table, there's also demand it has taken off the table," said oil analyst John Kilduff of Fimat USA in New York.
Some of the demand that has been lost is due to the devastation and evacuation of New Orleans. The rest is likely to be a consumer response to higher prices, he said. Backing that view was an Energy Department report that revised downward its forecast for US petroleum demand growth by 38 percent. The report predicted a 100,000 barrels per day increase in US petroleum demand in 2005; that is down from 160,000 barrels per day a month earlier ''largely due to sharply higher prices."
Light sweet crude for October delivery fell $1.59 to settle at $64.37 a barrel on the New York Mercantile Exchange. Nymex oil futures are roughly $6 below their intraday high of $70.85, reached Aug. 30, but prices are about 50 percent higher than a year ago.
''Nothing's cheap, it's just that it's coming way down from the panic buying that ensued in the hurricane's aftermath," Kilduff said.
Despite lingering concerns about Gulf Coast refinery outages, gasoline futures dipped more than 3 cents to settle at $2.0222 per gallon. Heating oil futures fell by 9.2 cents to $1.9623.
On London's International Petroleum Exchange, October Brent futures fell $1.78 to settle at $62.89 a barrel.
''You have to believe that high prices have certainly hurt some demand," said oil broker Tom Bentz of BNP Paribas Commodity Futures in New York. ''But how much is another story. If prices at the pump start falling, everyone will go right back to their old ways of guzzling gas."
Analysts said crude-oil futures also declined for the third straight trading session because of the gradual recovery of petroleum production in the Gulf of Mexico. More than 860,000 barrels per day, or 57 percent, of Gulf of Mexico oil production remains offline, according to federal statistics. But a week ago, 95 percent of oil output had been shut down.
Also providing some relief was a pledge last week from more than 20 nations to release the equivalent of 2 million barrels per day of crude and refined products. Over 680,000 barrels per day of that total will consist of gasoline and diesel, the IEA said Wednesday.
However, the amount of crude oil processed into gasoline, diesel and other fuels by Gulf Coast refineries could be reduced by close to 1 million barrels per day for at least several weeks.
The four refineries believed to be most affected by Katrina are:
Chevron Corp.'s plant in Pascagoula, Miss. (325,000 barrels per day).
ConocoPhillips' Belle Chasse, La., plant (247,000 barrels).
ExxonMobil's Chalmette, La., facility (187,000 barrels).
Murphy Oil Corp.'s Meraux, La., plant (120,000 barrels).
Another segment of the Gulf's infrastructure that may have sustained longer-term damage is the web of underwater pipelines critical to the gathering and transportation of natural gas. Three natural gas processing plants owned by Enterprise Products Partners LP are not yet operational and, depending on the extent of damage, could be out for weeks.
In testimony before Congress, Rebecca Watson, assistant secretary for minerals management, said four large platforms accounting for 10 percent of the Gulf's total oil output could take three to six months to fix.