The IPE December/January Brent spread also sprang higher over the week and hovered at more than 70 cents on Friday, compared to 35 cents seen earlier in the week and an average of about 24 cents since the beginning of October. Among the reasons, some dealers listed was strong buying pressure in December Brent futures, apparently from a major worried about difficulties in Nigeria. Others pointed to fundamentals on the North Sea crude market, with higher European refiningmargins encouraging maximum crude runs and a resulting shortage of prompt oil. "The North Sea has cleaned up extremely well, and physical oil is looking for the first time in many months to be verging on being tight," said one dealer with a trading house. "The two markets - IPE and NYMEX - are a little bit dislocated at the moment," added another trader. Among the reasons dealers gave for relative weakness in the US futures were steady weekly crude stocks data, and a lack of buying interest as many refiners prepare to run down their crude inventories ahead of the year-end, so decreasing their tax assessments.

US companies' crude stocks, which would have been assessed at around $12 a barrel at the end of last year, would now be priced about $10 higher than that, with a correspondingly higher tax bill, dealers said. Though US end-users might want smaller stocks at the time of financial reporting, they were likely to emerge early in December for cargoes to be delivered in early January. "There doesn't seem tobe active selling, but the lack of buying has meant NYMEX crude is lagging quite a lot now," said a trader with a European refiner. Squeeze worries Meanwhile, dealers said there were concerns over an impending squeeze on physical, or Dated Brent, with several players interested in seeing the price much stronger as they try to sell grades -- some from Nigeria -- priced off the benchmark.

Some of the 40-cent run-up in Dated Brent premiums this week reflected the fact that most North Sea grades were cleared out for the near future and, apart from Brent, there was little prompt oil being shown. But dealers said a leverage play was likely to bring stronger Dated Brent levels even though the fundamentals in northwest Europe might not warrant too much further strength. "We probably won't see them till Monday, but we're almost certain to see them come out with strong bidding then," said one trader with a US bank. Dated last traded at December Brent -15 cents, while next week's contracts-for-difference swaps, asign of expectations of the price direction over the next few days, were around flat to December Brent paper.

"It's all smoke and mirrors. I think the crude market is going to trade at very steamy numbers next week on Dated-related crudes, but it won't necessarily justify that if you look at the supply and demand in northwest Europe," he said.