By Eduard Gismatullin

Aug. 29 (Bloomberg) -- Crude oil traded near a one-week low in New York as Tropical Storm Ernesto veered away from the oil and gas region of the Gulf of Mexico, easing concern its output would be disrupted.

Royal Dutch Shell Plc plans to return workers to rigs and platforms after Ernesto, which struck southern Cuba yesterday, moved northeast on its way to Florida and South Carolina. BP Plc, the world's third-largest oil company, has restored output from its Prudhoe Bay field in Alaska to about 200,000 barrels a day, half the daily production capacity.

"Energy prices are weak on the latest National Hurricane Center forecast, taking Ernesto far away from the Gulf of Mexico producing area," The Schork Group Inc. said in an e-mail. "Ernesto is set to hug to the southeastern Florida coast as a tropical storm."

Crude oil for October delivery was at $70.71 a barrel, up 10 cents, in after-hours electronic trading on the New York Mercantile Exchange at 10:47 a.m. in London. Prices fell as low as $70.40 today, the lowest intraday price since Aug. 18.

Brent crude oil for October settlement was at $71 a barrel, up 18 cents, the London-based ICE Futures exchange.

"There's strong technical buying support at $70 a barrel, although fundamentals now are weak," said Tetsu Emori, the chief commodities strategist at Mitsui Bussan Futures Ltd. in Tokyo. "The peak-demand gasoline season is past its peak, and the fear about the hurricane has eased."

Ernesto was 235 miles (380 kilometers) south-southeast of Miami at 5 a.m. New York time, the U.S. National Hurricane Center said on its Web site.

Prudhoe Bay

Prudhoe Bay, the largest field in the U.S., is operating at about half its 400,000-barrel-a-day capacity after BP said Aug. 6 much of its pipeline network needs repairs. Output fell to about 110,000 barrels a day last week after a compressor failed.

BP said today it's being investigated by U.S. authorities for possible manipulation of the crude-oil and unleaded-gasoline markets. The crude oil inquiry is the subject of an inquiry by the U.S. Commodity Futures Trading Commission, which regulates futures markets. The Justice Department is probing BP's gasoline trading, according to Robert Wine, a BP spokesman.

Oil also traded lower on expectations a U.S. Energy Department report tomorrow will show U.S. refining reached a two- month high last week to meet gasoline demand during the end of the summer driving season. The median forecast of eight analysts surveyed by Bloomberg News was that refiners used 93 percent of their capacity last week, up from 92.8 percent the week before.

Demand for gasoline in the U.S., the world's biggest oil user, eases after the Labor Day holiday, which this year will be next weekend.

Gasoline for September delivery was up 1.59 cents at $1.799 a gallon in after-hours trading in New York. The contract expires Aug. 31.

The average U.S. price for unleaded gasoline at the pump fell to $2.84 per gallon yesterday from $2.848 the day before, according to the American Automobile Association, the nation's largest driver organization. The pump price is 23.7 cents higher than a year ago.

"Oil may decline to $65-a-barrel levels next week. Gasoline demand in the U.S. isn't as strong as earlier expected," said Kazuhiko Saito, a commodity strategist at Interes Capital Management in Tokyo. "Another bearish factor, the U.S. crude stocks are relatively high."

The Energy Department is scheduled to release its weekly report on petroleum inventories on Aug. 30 at 10:30 a.m. in Washington.

Mideast Worries

Oil reached a record high in New York on July 14 on concern fighting between Israel and Hezbollah forces in Lebanon would spread in the Middle East, the source of almost a third of the world's oil.

The United Nations Security Council gave Iran until Aug. 31 to halt enrichment or face possible sanctions. Iran said on Aug. 22 that it will continue uranium processing, which it says is part of its efforts to build a nuclear power station. Iran is the world's fourth-largest oil producer.

"There is a factor there that we do see indicates that there is some scarcity in the future" of oil, Jeremy Baker, a commodities analyst at UBS Wealth Management, said from Zurich. A slowing U.S. economy "shouldn't have a major impact" on demand for oil.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net