NEW YORK - Following is a summary of top stories in the energy sector Wednesday afternoon.

Gasoline Prices Higher

Gasoline prices at the pump rose 1.3 cents to a national average of $2.758 a gallon, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, peaked at $3.227 a gallon in late May as the refining industry experienced an unprecedented number of unexpected maintenance and operational outages.

The increase in pump prices came as the Energy Department's Energy Information Administration reported that refinery use rates fell 1.3 percentage points to 90.3 percent of capacity in the week ended Aug. 24. Analysts surveyed by Dow Jones Newswires, on average, expected no change.

The decline helped cut gasoline inventories by 3.6 million barrels. Analysts on average forecast a 1.8 million barrel drop.

The combination of lower refinery output and shrinking inventories could push gasoline prices higher, analysts believe.

The EIA also reported that crude oil inventories fell 3.5 million barrels, much more than the 800,000 barrel decrease analysts had expected.

Light, sweet crude for October delivery rose $1.78 to settle at $73.51 a barrel on the New York Mercantile Exchange, while September gasoline rose 8.54 cents to settle at $2.1008 a gallon.

In other Nymex trading, natural gas settled 16.3 cents lower at $5.430 per 1000 cubic feet, and heating oil rose 4.56 cents to finish at $2.0419 a gallon.

Lehman Says Energy Report for the Bulls, but Volatility Remains

"We think today`s DOE report was bullish for the petroleum complex in light of the much higher than expected 3.6 million barrels fall in gasoline inventory," Lehman Brothers (nyse: LEH - news - people ) analyst Paul Cheung wrote in a note to investors.

"However, we will be cautious to read too much into the number given the built-in volatility related to the weekly data series," he added.

Cheung said the current gasoline stock implies a 20.1 day supply, which is below the historical average of 21.3 days. "Inventories are now 4.2 percent below the seasonally adjusted 5-year average and 6.6 percent below the year-ago level."

Oil Service Companies Shares Gain

Shares of oil drilling and services companies outpaced gains in the broader market following the Energy Department's report on gasoline and oil stocks.

Transocean (nyse: RIG - news - people ) Inc. was among the sector's biggest gainers. Earlier in the day, RBC Capital Markets analyst Kurt Hallead trimmed his 2008 earnings estimate for the company to $11.73 per share from $11.81 because of lower-than-expected rates for drilling in India.

Sunny Day for Solar

Solar energy stocks shone, as investors picked up attractively priced shares following big losses Tuesday.

But analysts say solar companies continue to struggle with two major issues: high costs at the wholesale and retail levels and lack of silicon supply to expand production and meet increased demand.

Wedbush Morgan Securities analyst Al Kaschalk noted that solar energy contributed less than 0.1 percent of U.S. energy consumption last year. He doesn't expect it to improve much in the short term, but said there is "substantial room for growth," particularly if the government offers additional subsidies to offset the higher costs of solar installations for residential and commercial use.

"A major hurdle to the rapid adoption of solar cells has been the relatively high price tag at the wholesale and retail level," he said. However, he thinks companies are trying to drive down costs to become more competitive with traditional electricity providers.

Moody's (nyse: MCO - news - people ) Downgrades National Grid

Moody's Investors Service downgraded debt ratings for several of National Grid PLC's U.S. and U.K. subsidiaries on liquidity issues, and said it expects the company to seek more loans in the near term to provide some elbow room for spending.

"National Grid's liquidity position has become relatively tight given the group's forthcoming commitments in terms of capital expenditure, debt maturities and planned share buybacks," Moody's said in a statement.

National Grid completed its $7.3 billion cash acquisition of KeySpan Corp. (nyse: KSE - news - people ) on Friday and also assumed $4.5 billion in debt. Moody's expect the parent company to rely heavily on the U.S. units to help it service the increased debt load. The agency added that National Grid's cash-flow-to-debt ratio leaves the company weakly positioned and provides "very little headroom" for further spending.

The agency kept investment-grade ratings on National Grid's long- and short-term debt and changed the utility's outlook to "Stable" from "Developing." National Grid's low-risk profile and predictable operating cash flow support the rating, Moody's said.

New High for Dry Bulk Rates

Dry bulk shipping rates surged to new highs, as demand for the vessels that carry iron ore, coal and grain around the world kept up unabated.

The Baltic Dry Index, which measures rates on 40 shipping routes on a time charter and voyage basis, closed at an all-time high of 7474, up 93 points from Tuesday's close.

Spot rates for medium-sized Panamax vessels now top $60,000 per day and are around $115,000 per day for larger Cape size ships.

Analysts say longer routes and tight availability of ships will push rates higher for the foreseeable future.