US oil imports remain above 10 million barrels a day and crude stocks are steadily rising, up a further 1 per cent to 294 million barrels in the week to 14 November. However, it is a worsening products situation that is worrying the market. The central problem is that gasoline demand has been unexpectedly strong for the time of year – a phenomenon analysts attribute to improving economic conditions. Supplies of reformulated gasoline, the more environmentally-friendly fuel demanded by some state governments, is 23 per cent lower than at the corresponding point in 2002.

Heating oil is in a healthier position: stocks are at 55.7 million barrels, marginally up year-on-year. But the fourth quarter of 2002 was itself tight due to refinery shutdowns. As the weather cools and the nights draw in, traders fear possible winter shortages.

The European products market is also tight: last winter, Europe stepped in to make up the US products shortfall, but this appears unlikely to happen to the same extent this time around.

The tight market is unusually susceptible to bad news, real or imagined. ‘One could spend time separating the rumours from the facts, the leaking Russian gasoline tankers from the supposed Venezuelan coups and the flooded refineries,’ says Paul Horsnell, analyst at JP Morgan. ‘The central observation is that one must expect such movements in a market operating with the minimum of headroom, the thinnest industry cushion to absorb shocks and a logistical system that is creaking.’

Iraq was the major news story creating bullish sentiment. A bomb attack which killed at least 26 people in Nasiriya on 15 November highlighted the security problems even in an area previously thought to be safe and sympathetic to the US-led coalition. Adel Qazaz, director-general of the Northern Oil Company, said on 19 November that he could not put a timeframe on the reopening of the Kirkuk-Ceyhan export pipeline because of continued sabotage attempts. The crucial link continues to fall victim to at least one attack a week, Qazaz said.