Oct. 4 (Bloomberg) -- Crude oil fell for a third session on speculation the release of emergency stockpiles will help cover U.S. production lost in the Gulf of Mexico and amid a seasonal decline in demand.

Oil companies are repairing damage to offshore platforms caused by hurricanes Katrina and Rita and increased output in the region by 80,000 barrels a day from last week, the U.S. Minerals Management Service said yesterday. Energy Secretary Samuel Bodman urged Americans to conserve energy while platforms and refineries are repaired.

``We're kind of fortunate we're in the shoulder season as far as demand is concerned,'' said Steve Taylor, an oil trader at New West Petroleum Inc. in Sacramento, California. ``We should see a bit of a pullback in demand and maybe that will give us some time to recover from these storms.''

Crude oil for November delivery fell as much as 37 cents, or 0.6 percent, to $65.10 a barrel in after-hours trading on the New York Mercantile Exchange. It was at $65.39 a barrel at 8 a.m. in Singapore, 31 percent higher than a year ago.

Yesterday, the November contract fell 77 cents, or 1.2 percent, to $65.47 a barrel. Futures have declined 7.8 percent since touching a record $70.85 a barrel on Aug. 30, the day after Katrina made landfall.

The Gulf of Mexico accounts for about 30 percent of U.S. oil output. Hurricanes Katrina and Rita have so far halted production of 45.1 million barrels of oil, or 8.2 percent, of the region's annual output, the Minerals Management Service said. Production shut by storms yesterday totaled 1.39 million barrels, 93 percent below pre-hurricane levels, the service said.

Worst News Over

``All of the worst news has been digested and now it's time for a re-evaluation of the situation,'' said Jim Steel, director of commodity research at Refco Inc. in New York. ``Demand is probably down as a result of increased prices. Also, there is more oil available than refiners can process.''

The 26 member countries of the International Energy Agency have agreed to release 60 million barrels of oil and fuels to help the U.S. meet its energy needs. At least 35 million barrels of that will be delivered by the end of October, the Paris-based agency said Sept. 28.

Still, U.S. fuel demand typically peaks during the northern hemisphere winter. Increasing demand and the damage from the hurricanes means Americans should insulate their homes and use energy efficient lighting to avoid higher costs this winter, Energy Secretary Bodman said yesterday.

``The need to use energy more wisely is particularly acute this year because of the higher prices we expect to see.''

Gasoline Falls

Gasoline and heating oil also fell on speculation that high prices are reducing consumption of the fuels. U.S. gasoline demand averaged 8.8 million barrels a day during the four weeks ended Sept. 23, 2.8 percent below the same period a year earlier, the Energy Department said last week. Overall fuel use fell 3.5 percent to an average 19.7 million barrels a day.

``The demand numbers are pretty abysmal,'' said Kyle Cooper, an analyst with Citigroup Inc. in Houston. ``Demand is the key. If demand stays where it is, you don't have to worry as much about lost production.''

Gasoline for November delivery fell 3.46 cents, or 1.7 percent, to $2.0622 a gallon in New York. It was at $2.0550 in after-hours trading, 54 percent higher than a year ago.

Heating oil for November delivery fell 4.87 cents, or 2.3 percent, to $2.0809 a gallon in New York. It was at $2.0680 in after-hours trading, 49 percent higher than a year ago.

Pump Prices Rise

Regular-grade gasoline, averaged nationwide, rose 2.8 cents to $2.938 a gallon on Sept. 30, according to data released yesterday by the AAA, the nation's largest motoring organization. Prices have declined 3.9 percent since touching a record $3.057 on Sept. 2.

``The prices are having an affect, but I think it's more to do with people's attitude,'' New West's Taylor said. ``While the country is recovering from these storms people are tending to sit tight and curtail their spending a little.''

To contact the reporter on this story: Gavin Evans in Wellington, New Zealand at gavinevans@bloomberg.net

Last Updated: October 3, 2005 20:28 EDT