Oil Falls a Third Day on Increased U.S. Output, Waning Demand

Sept. 25 (Bloomberg) -- Crude oil fell for a third day in New York as U.S. producers in the Gulf of Mexico increased output after a storm threat passed.

BP Plc, Royal Dutch Shell Plc and other oil companies have so far restored about 70 percent of the production shut down last week when a tropical depression formed in the eastern gulf, according to government records. A report tomorrow will probably show U.S. stockpiles declined last week because of the closures and as refiners slowed imports during plant maintenance.

``Some of the weather premium is coming out of the market,'' said Tom Hartmann, commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. ``There was some production shut in. With that coming back and with nothing threatening on the horizon, $80 is a little bit expensive.''

Crude oil for November delivery fell as much as 73 cents, or 0.9 percent, to $80.22 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $80.38 at 10:32 a.m. in Singapore.

The contract dropped 67 cents, or 0.8 percent, to $80.95 a barrel yesterday. October oil reached $83.90 a barrel on Sept. 20, the highest since the futures were introduced in 1983.

The Gulf of Mexico accounts for about a quarter of U.S. oil production and half the nation's refining capacity.

Offshore output in the region was down by 251,285 barrels a day, or 19 percent, midday yesterday, according to the U.S. Minerals Management Service. At the peak of the evacuations on Sept. 21, as much as 814,578 barrels, or 63 percent, of the region's daily total was halted.

Price Outlook

``Prices will stay under pressure because of the return of production in the Gulf,'' Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis, said yesterday. ``We should continue to see demand revised downward, which will also push prices lower.''

Brent crude oil for November settlement fell as much as 51 cents, or 0.7 percent, to $78.22 a barrel on the London-based ICE Futures Europe exchange. It was at $78.32 at 10:34 a.m. Singapore time.

The U.S. is the world's largest oil consumer. The Energy Department's weekly stockpile report tomorrow will probably show the nation's refining rates fell for a third time as companies shut units for maintenance before the peak winter demand period.

Plant utilization probably fell to 88.6 percent of capacity last week, the lowest since April, according to the median estimate from a Bloomberg News survey of 13 analysts.