Oil price gains were capped by a surprise surge in gasoline supplies, but investors are still keeping a wary eye on Hurricane Rita.

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NEW YORK (CNN/Money) - Oil prices closed higher Wednesday, capped by a government report that said crude oil stocks fell unexpectedly, while gasoline inventories surprisingly surged.

U.S. light, sweet crude for November delivery ended the day up 60 cents at $66.80, after hitting an intraday high of $68.27, as investors warily eye Hurricane Rita.

Crude oil prices have been extremely volatile this week, falling just over $1 a barrel Tuesday and surging $4.39 during Monday's session on the New York Mercantile Exchange on news that Hurricane Rita may pose a threat to the already damaged Gulf Coast region filled with refineries and off-shore crude oil and natural gas production platforms.

Peter Beutel, president of energy tracking firm Cameron Hanover, says the Category 4 storm is what is on everyone's mind right now, not the EIA report.

"People are not paying very close attention to it," Beutel told CNN/Money. "At this point this market is just living and dying with every twist and turn of weather report -- we'll probably revisit it later but it's not important until we get Rita out of our systems."

Crude oil inventories fell by 300,000 barrels from the previous week. At 308.1 million barrels, U.S. crude oil inventories remain above the upper end of the average range for this time of year.

Analysts surveyed by Reuters expected a 200,000 barrel increase in crude oil inventories.

Total motor gasoline inventories rose by a surprising 3.4 million barrels last week, according to the EIA report, putting them in the lower half of the average range. Analysts polled by Reuters anticipated a fall of 200,000 barrels.

Wholesale gasoline prices were up 8.34 cents to $2.06 a gallon following the release of the report.

The agency reported that gasoline production increased significantly in the week ended Sept. 16, averaging 8.8 million barrels per day.

Tom Kloza, senior analyst at the New Jersey-based Oil Price Information Service, said that even with the jump in gasoline stocks, wholesale gas prices may continue to go up because of Hurricane Rita fears.

"We're looking at some pretty compelling increases mostly for gasoline, and it's based on worry," said Kloza.

The EIA also reported that inventories of distillate fuel, used for heating and jet engines, increased by 800,000 barrels last week and are above the upper end of the average range for this time of year. The supply was expected to drop 200,000 barrels.

Distillate production also climbed, averaging 3.9 million barrels per day.

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Gasoline prices continue to slide as Rita strengthens -- Click here.

But some analysts say that prices at the pump could hit $5 -- Click here.

Click here for CNN/Money's special report 'Oil Crunch 2005'.