Oil Shoots Past $94 Again

Energy futures climbed after the government reported unexpected declines in supplies of crude and heating oil last week and the Federal Reserve said it will work with other central banks to ease the global credit crunch.

Light, sweet crude for January delivery rose $4.37 to settle at $94.39 a barrel on the New York Mercantile Exchange. It was crude's highest close since Nov. 27.

Crude supplies fell 700,000 barrels during the week ended Dec. 7, according to a weekly inventory report from the Energy Department's Energy Information Administration. That compared with analysts' expectations that oil supplies would rise by 100,000 barrels, according to Dow Jones Newswires. Distillates, which include heating oil and diesel fuel, fell 800,000 barrels. Analysts expected inventories to rise by 300,000 barrels.

January heating oil futures jumped 12.02 cents to settle at $2.6432 a gallon.

Other Nymex futures rose as well. January gasoline gained 12.14 cents to settle at $2.4128 a gallon. The EIA said gasoline supplies rose last week by 1.6 million barrels. Analysts forecast a 1.2 million barrel increase.

Natural gas settled 32.3 cents higher at $7.408 per 1,000 cubic feet.

Oil Shares Follow Futures Higher

Oil stocks rallied in the wake of the Fed's liquidity plan, the government's petroleum inventories report and higher futures prices.

The Amex Oil Index, which mostly tracks integrated oil and refining stocks, rose 2.6 percent, while the Philadelphia Oil Service Sector Index, comprised of drilling and oilfield service providers, gained 2.6 percent.

Hess Corp. leapt more than 7 percent to $82.13 while reaching an all-time high of $82.48 in afternoon trading. Exxon Mobil rose $1.64 to $91.92. ConocoPhillips gained $1.68, or 2.1 percent, at $83.37. Chevron

Among offshore drilling contractors, Diamond Offshore Drilling Inc. rose $4.10, or 3.3 percent, to $129.85. Earlier in the day, Capital One Southcoast analyst Kelly Chancey lowered his rating on the stock to "Hold" from "Buy" saying the company's "valuation is getting a little rich."

Energy Dept. Expects Slower Consumption

Higher energy prices and slower economic growth will slow the pace of energy consumption in the U.S. through 2030, according to a new report from the Energy Department.

But despite the rapid growth expected for renewable sources and an increase in nuclear power, the annual energy outlook from the Energy Information Administration said oil, coal and natural gas will still have about 84 percent of the country's energy market in 2030 compared with about 86 percent last year.

Total energy demand is expected to grow 0.9 percent annually till 2030, down from last year's projection of 1.1 percent growth.

EIA said oil prices will fall from present levels by 2016 as new investments lead to a boost in supplies, but will reach $113 a barrel in nominal dollars by 2030.

U.S. ethanol use is estimated to grow to 13.5 billion gallons in 2012, more than twice the 5.6 billion gallons used in 2006. By 2030 ethanol use could reach 17 billion gallons, according to the report.

Natural gas's share of electricity generation will fall to 14 percent in 2030 from about 20 percent today, as more plants are fueled by renewables and coal.

Lukoil Profit and Production Rising

Russian oil company OAO Lukoil expects to boost its oil and natural gas output by 5.5 percent next year and is working to refine all its crude oil at home rather than ship it abroad.

Vice President Leonid Fedun's comments came the same day Lukoil said profit rose 2.1 percent to $2.48 billion. Sales increased 17 percent to $21.3 billion.

In a presentation to analysts and investors in New York, Fedun said Lukoil's vast reserves should allow it to meet its long-term goal of producing the equivalent of 3.5 million to 4 million barrels of oil per day, even as other companies' production levels fall off in the coming years.

Part of Lukoil's increased production will draw on new oil and gas fields the company is developing. Fedun promised "very impressive data" next year about the Timan-Pechora field in northern Russia, although he said the company and partner ConocoPhillips -- which owns a minority stake in Lukoil -- were "not in a hurry" to publicize their findings.

Fitch Says Utilities "Stable"

Fitch Ratings issued a "Stable" credit rating on U.S. utilities for 2008, saying utility, power and gas sectors will be relatively unaffected by the U.S economic slowdown.

In the power and gas subsectors, Fitch has a "Stable" outlook on investor-owned electric and gas utilities, interstate natural gas pipelines and public power companies. U.S. wholesale power generating companies have a "Positive" outlook. Fitch also has a "Positive" outlook for midstream gas processors.

The outlook is "Negative" for retail propane distributors.

Fitch said power and gas utilities are insulated from the broader economy, because they have relatively open access to credit and capital markets and are viewed as "defensive" sectors by investors.

Oil to Gas in Years Instead of Eons

Canadian and British researchers say they converted oil into small amounts of methane gas during two years of lab research, a process that takes tens of thousands of years in nature.

"You'd basically feed them Miracle-Gro or fertilizer to accelerate their growth rate," said study co-author Steve Larter, a University of Calgary petroleum geologist.

The results were published in the journal Nature.

The hope is that oil in older, less productive fields can be converted relatively quickly to natural gas for energy production. Researchers admit they have a long way to go to show their findings work economically on a large scale.

"You're talking a very substantial amount of energy," said Lartner. "It's potentially a game changer if it can be demonstrated."

Statoil Spill Off Norway

Up to 25,000 barrels of oil spilled into the North Sea while crude was being transferred from a StatoilHydro drilling platform to an oil tanker.

Officials said ships were on the scene 125 miles offshore collecting as much crude as possible. They said there was little risk of oil reaching the coast.

The spill is the second-worst in Norway's offshore oil history, but far smaller than the 78,000-barrel spill from a platform blowout in 1977.

The cause of the latest spill appeared to be a defect on a floating oil loading buoy used to transfer crude to tankers.

--Compiled by AP Business Writer Greg Stec. Questions or comments can be directed to gstec@ap.org.