The moment the New York Mercantile Exchange oil market opens, rumors and fragmentary reports start flooding in. Iraq is setting its oil fields ablaze. Saddam Hussein has been killed. Saddam is alive but wounded.

Ken Jarrett, J.P. Morgan Chase & Co. vice president and oil-futures trader, lets the noise filter past him. A floor broker at the exchange breaks in over the squawk box on Jarrett's desk, a cramped space framed by four computer screens and countless blinking phone lines.

The burning fields will drive up the price of crude, the broker urgently intones. Now might be a good time to buy into a rally. Jarrett flips off the intercom and shakes his head.

"Rubbish," the 39-year-old London native says in his smooth British accent. "I just think this whole oil-field story is nothing to be buying off of." Jarrett is not convinced the fires will be serious. And he says the market has already factored in that no oil will flow out of Iraq anytime soon.

Still, the price of crude for April delivery, which opened at $29.88, begins to ascend. Soon it's up a dollar as early reports are confirmed -- Iraqi oil-well heads are burning at the Rumaila field near the Kuwaiti border. Iraq pumps 3 percent of the world's oil, and concern over a disruption in flow helped drive crude prices over $40 a barrel in recent weeks.

Jarrett and his colleagues on J.P. Morgan's small energy-trading desk shrug off the move and start thinking about what to have for lunch. They wonder if they dare unglue their eyes even for a moment from CNN's coverage of the war to check in on the opening round of the NCAA men's college basketball tournament.

They decide they'd better not. Events are moving too fast and night is falling on Baghdad, meaning U.S. bombing raids could resume anytime. And in an energy market that reacts on a hair trigger to any news from the Middle East, J.P. Morgan's traders can't afford to miss a beat.

At 12:32 p.m., White House press secretary Ari Fleischer tells reporters in Washington that there are only a "small number" of fires and says Saudi Arabia and other oil producers are increasing supplies to offset any possible loss of Iraqi oil. Shortly after the briefing, the price of crude begins to drop.

"Here we go, boys, we are now down 50 cents!" crows Jarrett, as his early-morning caution begins to pay off.

At 1 p.m. Eastern, 9 p.m. Baghdad time, anti-aircraft tracers begin to flare in the night sky. John Gray, a 37-year-old Minnesotan and Jarrett's right-hand man, begins fielding calls from colleagues in London who are filled with ideas for complex option trades to help J.P. Morgan's corporate clients capitalize on the sell-off. Gray works the phones and puts together a few decent deals. "Every squirrel gets his acorn," he will say later, assessing his day.

On screens above the traders' desks, fiery explosions ring out and news reports suggest that a 10-story building, part of a presidential compound in Baghdad, is on fire. Crude continues its rapid descent.

"The more bombs drop, the lower it goes!" shouts energy trader David Kipler. "Everyone seems to think this thing is going to be over quickly." Oil prices tend to drop when confidence rises that the war will be short and not disrupt production from Iraq and other Persian Gulf nations.

Jarrett, fingers flying over his keyboard as he e-mails colleagues and clients and updates his trading spreadsheets, hunches close to the screen and checks the falling price. "Look out below! This market is giving up the ghost."

Complimented on his decision not to buy early in the day, Jarrett breaks into a broad smile. "There you go, mate!" he says before busying himself with selling futures for May delivery.

Between trades he fields a call from a federal regulator asking what he thinks about the oil market. Jarrett insists again that the fires will not have much impact and that investment in new technology after the war will increase Iraq's output, possibly negating any damage Hussein may do to his country's oil fields.

As the 2:30 p.m. close on the New York Mercantile Exchange approaches, Jarrett is asked if he might use the day's decline as an opportunity to do some buying. He demurs. Asked why, he says, "You want an honest answer? It's because I have a very low tolerance for being wrong. And it's just too hard to pick a bottom in this market right now."

Earlier in the day, David W. Puth, a managing director and head of J.P. Morgan's energy and foreign-exchange trading operation, said the firm has more at stake than just trying to make the right trades. Lower oil prices, combined with rock-bottom interest rates and possible fiscal stimulus if President Bush's tax-cut plan passes, could drive a more rapid economic recovery, possibly leading to higher stock prices. "The recovery looks a lot different at $20 a barrel than it does at $30," Puth says.

Back on the floor, the U.S. trading day ends with crude oil prices down 4.3 percent, to $28.61 a barrel. Jarrett is vindicated. A cheer goes up across the vast open room. But it has nothing to do with Jarrett's work, or continued air strikes in Baghdad. The TV sets have all switched to basketball. University of California freshman Richard Midgley, like Jarrett an Englishman, has nailed a three-pointer to beat North Carolina State at the buzzer in overtime.

"Look out below," J.P. Morgan Chase oil trader Ken Jarrett said as crude futures fell."This market is giving up the ghost," said J.P. Morgan Chase oil trader Ken Jarrett. Futures fell 4 percent as fears of diminished Iraqi oil output faded.