Burning of paraffin in wick: O2 + CNH2N+2 -> H2O + CO2 (Note that the exact number of oxygen and paraffin molecules need not be specified in order to investigate the ratio of gaseous reaction product molecules to the original oxygen molecules, as will be seen.)
Neglecting the "2" in the subscript "2N+2", the ratio of carbon to hydrogen in the paraffin is N:2N. (This can be done because paraffin is a long chain of CH2 segments, with an extra H atom at each end, so N>>2.) Each carbon atom combines with one molecule of oxygen, producing the same number of CO2 vapor molecules in the reaction products as there were O2 molecules in the original air. However, the production of water vapor uses one molecule of oxygen to produce TWO molecules of H2O. Thus for every two oxygen molecules used up in the reaction three molecules of gaseous reaction products are created.
Therefore, considering all of the paraffin consumed in this basic reaction, there are always more H2O and CO2 molecules produced by the combustion than there were O2 molecules originally. The water level in the tube should go down!!
However, some of the H2O condenses on the inside of the tube and some of the CO2 is absorbed by the water.
In addition, other combustion products are created, such as CO and partially burned paraffin molecules. These further complicate the situation.
Finally, combustion is not supported with very small amounts of oxygen in the air; a minimum oxygen content that is significantly greater than zero is required. This puts an additional limit on the maximum effect that can be seen with this demonstration.