The main question is whether the US inventory decline is a sign that producers' efforts to reduce the world oil glut are working, or simply the short-term effect of stock-building ahead of a heavy autumn repair schedule for US plants.

Benchmark crude prices in New York have recovered from $13.35 a barrel early in August to above $14.50 currently, as US crude oil inventories have fallen by about 15 million barrels to 330 million barrels. Some market analysts have interpreted the stock drop as the delayed effect of two rounds of production cuts by major oil producers in April and July, though evidence available so far suggests that it has more to do with refinery behavior.

Roger Diwan, an analyst with Petroleum Finance Co in Washington, argues that the recent decline is anaberration.

``I don't think we're on a trend toward a sharp downturn on crude stocks. If anything, we're stable and (stocks) might increase over the next months or so," he says, pointing to the drop in demand from the US refining sector, which is expected to accompany maintenance this fall. Among the major plants due to be partly idled for significant periods this autumn are Exxon's 432,000-bpd Baton Rouge, Louisiana and 411,000-bpd Baytown, Texas, plants as well as Tosco's 240,000 bpd Bayway, New Jersey, refinery and Sun Co's Philadelphia 307,000-bpd complex, the latter two accounting for a large chunk of the east coast's refining capacity.US crude inventories -- and prices -- have generally followed the running rates of refiners and heavy autumn downtime would be expected to increase inventories and put pressure on prices. For example, a decline in nationwide running rates of 1.8 million barrels per day (bpd) to 13.8 million bpd from August 1997, to the end of February 1998 coincided with a rise in crudestocks of 30 million barrels to 330 million barrels.