Sept. 8 (Bloomberg) -- Crude oil fell after a government report showed that U.S. oil and petroleum product inventories declined less than expected in the wake of Hurricane Katrina.

Crude oil supplies dropped 6.5 million barrels to 315 million last week, the Energy Department reported today. Stockpiles were expected to fall 7.7 million barrels, according to a Bloomberg survey. Members of the International Energy Agency have agreed to release about 2 million barrels of oil and petroleum products a day to ease shortages. Half of the barrels will come from the U.S. Strategic Petroleum Reserve.

``Crude supplies were down but nowhere near as much as they were expected to be,'' said Kyle Cooper, an analyst with Citigroup Inc. in Houston. ``We are going to be getting SPR oil and imports so crude-oil inventories will be in good shape.''

Crude oil for October delivery fell 57 cents, or 0.9 percent, to $63.80 a barrel at 1:01 p.m. on the New York Mercantile Exchange. Futures touched $63.10, the lowest since Aug. 19. Prices are 50 percent higher than a year ago.

In London, the October Brent crude-oil futures contract fell 50 cents, or 0.8 percent, to $62.39 a barrel on the International Petroleum Exchange. Prices touched $68.89 on Aug. 30, the highest since trading began in 1988.

IEA members will provide 1.28 million barrels a day of crude oil and 683,000 barrels a day of refined products, including 369,000 barrels of gasoline, 190,000 barrels of middle distillates and 38,000 barrels a day of fuel oil, the agency said in an e-mailed statement yesterday.

The Paris-based agency, founded in November 1974 in response to the Arab oil embargo, coordinates energy policies of its member nations, including the release of stocks during emergencies.

Gasoline Supplies

Gasoline inventories declined 4.3 million barrels, or 2.2 percent, to 190.1 million last week, the lowest since November 2000, according to the report. A decline of 6.3 million barrels was expected, according to the median estimate of 14 analysts surveyed by Bloomberg. Stockpiles have fallen for 10 straight weeks.

Gasoline for October delivery rose 0.03 cent to $2.0225 a gallon in New York. Prices touched $1.97, the lowest since Aug. 26. The September gasoline contract touched $2.92 a gallon on Aug. 31, the last day it traded and the highest since trading began in 1984. Gasoline futures are up 71 percent from a year ago.

Demand for gasoline plunged 4 percent to 9 million barrels a day, the lowest since April, the report showed. Total demand for petroleum products slipped 3.3 percent to 20.9 million barrels a day.

`Thinking Twice'

``We've been trying to figure out what was hurt most, demand or supply,'' said Ric Navy, a broker at BNP Paribas SA in New York. ``Demand has been affected by these prices. We're seeing evidence that people are thinking twice before taking trips in the car.''

Refineries operated at 86.8 percent of capacity, the lowest since the week ended Sept. 24, 2003, when Hurricane Ivan devastated the Gulf region. The 10.3 percentage point decline was in line with analysts' expectations.

The department released its weekly report on petroleum inventories at 10:30 a.m. in Washington. The release was a day later than usual because of the Labor Day holiday on Sept. 5.

U.S. Gulf Coast oil refineries shut since Katrina will take at least another month and as long as three months or more to resume operation, Energy Secretary Samuel Bodman said. The plants that are still idle represent about 4 percent to 5 percent of U.S. refining capacity, Bodman said today in an interview in Washington.

Pump Prices

Gasoline prices at the pump have surged with futures as Katrina closed refineries and pipelines. Regular-grade gasoline, averaged nationwide, fell 1.2 cents to $3.03 a gallon yesterday, according to data released today by the AAA, the nation's largest motoring organization. Prices surged to a record $3.057 on Sept. 2. Pump prices have jumped 30 percent in the last month and are 65 percent higher than a year ago.

The state with the most expensive gasoline is New York, where a gallon averages $3.318, according to the AAA. Prices are 66 percent higher than a month ago. New York is the fourth- biggest gasoline consumer in the U.S. The lowest pump prices are found in Mississippi, where a gallon averages $2.729.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

Last Updated: September 8, 2005 13:10 EDT