NEW YORK (CNN/Money) -
Oil prices fell Thursday, even after a government report showed that crude oil inventories had grown less than expected and distillate stockpiles, including heating oil, fell for the third straight week.
"Everything pretty much came within the range of expectations so there were no dramatic surprises here," Tim Evans, a senior energy analyst at IFR Markets, told CNN/Money.
U.S. light, sweet crude for November delivery lost $1.04 to end the day at $63.08 a barrel on the New York Mercantile Exchange. Just before the Energy Information Administration released its report, the contract was down 72 cents at $63.40. It fell as low as $62.45.
Crude oil inventories climbed by 1 million barrels from the previous week, versus forecasts for an increase of 2.1 million barrels, according to Reuters. At 306.4 million barrels, U.S. crude oil inventories remain above the upper end of the average range for this time of year.
The EIA also reported that average monthly domestic crude oil production levels during the month of September fell to 4.232 million barrels per day, its lowest level since August of 1943.
Hurricanes Katrina and Rita slowed domestic oil production in September, bringing 100 percent of the U.S. oil output, or 1.5 million barrels per day, to a halt at one point during the last week of September,
In August 1943, while in the midst of World War II, the U.S. only produced an average of 4.219 million barrels per day domestically.
In Wednesday's report, EIA said that distillate fuel inventories fell by 3.4 million barrels last week, larger than the 1.7 million drop that the Reuters survey had anticipated.
Evans said the distillates category did deliver one surprise as the EIA reported a decline of 4 percent in distillate demand over the last four weeks.
"I think the distillate demand figures were a little softer than expected," he said. "That gives us a little a bit of an offset to the decline in stocks."
Inventories fell for both low-sulfur distillate used for diesel engines and high-sulfur distillate fuel used for heating oil.
The drop in distillate inventories has sparked fears of high energy bills this winter and prompted the Energy Department to consider tapping into its emergency heating oil reserves, Reuters reported.
On Wednesday, the EIA released its winter outlook report, revealing that one-third of U.S. crude oil output in the Gulf of Mexico will still be shut in during December due to disruptions caused by hurricanes Katrina and Rita.
"Complete recovery of energy infrastructure from hurricane damage will take many months. However, considerable recovery should occur by the end of 2005," the agency said.
The EIA anticipated that the average price of a barrel of oil will be about $64 to $65 in 2006, up from the $58 a barrel average expected for this full year.
Total motor gasoline inventories fell by 3.4 million barrels last week, putting them in the lower half of the average range for this time of year. Gasoline inventories were expected to fall 1.6 million barrels last week, according to a Reuters survey.
EIA also reported that over the last four weeks, motor gasoline demand has averaged over 8.8 million barrels per day, or 2.4 percent below the same period last year.
The average nationwide price for a gallon of regular unleaded gasoline fell nearly 2 cents to $2.837 a gallon from $2.854 Wednesday, AAA reported.
Prices at the pump have trended lower recently after peaking at $3.057 on Labor Day in the wake of Hurricane Katrina.
How will your heating bills look this winter? Click here.
Click here for CNN/Money's special report 'Oil Crunch 2005'.