SAUDI SUCCESS SEEN IN CURBING OPEC PRODUCTION
Saudi Arabia will succeed in pressuring
other members of the Organization of Petroleum Exporting
Countries to stay within their production quotas, said Morgan
Stanley Group managing director John Wellemeyer.
    Wellemeyer, speaking to reporters at an offshore oil
engineering conference, also said he expected OPEC nations to
attempt to hold prices under 20 dlrs a barrel for several years
to keep industrial demand for residual fuel oil strong.
    "Over the next few weeks I think you'll see a concerted
effort by the Saudis to get production down," Wellemeyer said.
    "The Saudis are committed to that price level (of 18 dlrs a
barrel) and are willing to make it happen again," he said.
    In recent weeks, oil prices fell to the 16 to 17 dlrs a
barrel level on market reports of some OPE members producing
above their quota, pushing total OPEC production to 15.8 mln
barrels per day. But prices rebounded today, with April U.S.
crude prices up about one dlr to over 17 dlrs a barrel on a
belief Saudi Arabia is attempting to curb OPEC output.
    Wellemeyer said that sharp declines in U.S. oil production
could push demand for OPEC oil above 20 mln barrels per day as
early as 1989 and up to 24 mln barrels per day by 1993.
    Although the projected increases in demand for OPEC oil
should strengthen world prices, Wellemeyer said he believed the
organization would hold its official price below 20 dlrs a
barrel for some time to prevent residual fuel users from
switching to natural gas supplies. The interfuel swing market
accounts for about eight mln barrels a day, or 18 pct of the
world demand for oil.
 Reuter
