There are severely genuine signs of volume constriction from OPEC producers. They are keeping to their pledges,

There are severely genuine signs of volume constriction from OPEC producers. They are keeping to their pledges.

Altogether we're on target. The market's behaving very well right now.

Yesterday's rally was based on a number of factors. There was some financial geometry in there as well. It was an options expiry day on the New York Mercantile with a rising market. That gave it a little more oomph than it needed. Now that oil's flowing, prices are coming back in line.

What we're partly faced with is a temporary aberration. But even if we fast-forward to tomorrow [after the contract change] we're still at $30 a barrel - which is about 10 percent above the year's average.

The last time the U.S. was engaged militarily in Iraq, oil prices shot up to about $42 a barrel,