NEW ORLEANS/WASHINGTON,  (Reuters) – A U.S. appeals  court yesterday rejected the Obama administration’s request  to stay a lower court decision to lift a six-month moratorium  on deepwater oil drilling in the wake of the BP Plc oil spill.

The U.S. Court of Appeals for the Fifth Circuit, based in  New Orleans, ruled about an hour after hearing arguments. Its decision will likely prompt the Interior Department to  quickly issue a revised moratorium order on deepwater drilling  below 500 feet (152.5 metres) to address concerns raised by the  federal courts. The Obama administration imposed the moratorium amid public  criticism over its response to the biggest offshore oil spill  in U.S. history and had argued that its reinstatement was  needed to investigate the cause of the BP well blowout in the  Gulf of Mexico and ensure other rigs were operating safely.

Drilling companies, like Hornbeck Offshore Services Inc.  and Diamond Offshore Drilling Inc., have pressed to have the  moratorium lifted, saying it was too broad and was causing  significant economic harm.

The administration said it imposed the moratorium to allow  for an investigation of the April 20 drilling rig explosion  that killed 11 men and triggered the spill.

Now in its 80th day, the flow of oil is killing birds, sea  turtles and dolphins, imperiling multibillion-dollar fishing  and tourist industries at a time of high unemployment, and  soiling the shores of all five U.S. Gulf Coast states.

The oil industry, however, fears that the crisis could put  costly projects on hold.

BP’s New York share price yesterday rose about 2 percent,  adding to gains of 24 percent in the previous eight trading  days on talk company executives were seeking new investors and  optimism the worst might be behind BP.