OIL PRICES SEEN HOLDING STEADY IN SECOND QUARTER
Japanese oil traders generally expect oil
prices to remain steady through June, when the next
Organization of Petroleum Exporting Countries' (Opec) meeting
is scheduled to take place.
    Prices have kept to a narrow trading range for more than a
month, despite coming under considerable pressure in February
as Japanese oil companies holding high oil stocks strongly
resist paying official prices, trade sources said.
    Despite these attempts, spot crude rose steadily to
stabilize around OPEC's 18 dlr a barrel target, they said.
    Spot prices fell more than two dlrs during the month,
mainly on market assumptions Opec was producing more than its
15.8 mln barrel a day (bpd) self-imposed ceiling and members
would submit to pressure to discount prices, oil traders said.
    However, Opec's discipline in holding its price and output
targets eventually forced many of the buyers back, they said.
    Countries such as Qatar, Iran and Iraq refused to bend to
demands for lower prices in spite of threats of non-lifting
from Japanese buyers.
    The solidarity of Opec encouraged Qatar to charter vessels
to store its production rather than cut its prices, they said.
    Opec's March production was 14.6 mln bpd, 1.2 mln below its
ceiling, with Saudi Arabia's output just below 3.0 mln bpd
compared to its Opec quota of 4.133 mln bpd, the Middle East
Economic Survey estimated.
    "Of course there was a little cheating but not enough to
destroy the market," an oil trader in Tokyo said.
    Opec crudes have been appearing on the spot market at
discounted prices through barter deals and the swapping of
Middle East grades for North Sea cargoes, but these trades have
not generated sufficient volume to depress the market, he said.
    The current spot values of Middle East grades are only 20
to 25 cts below official prices, so resistance to buying crude
under term contracts in the second quarter is likely to be
weaker, traders said.
    Indonesia's Minister of Energy and Mines Subroto said today
OPEC faces the choice of either maintaining present output
volume at 15.8 mln bpd and seeing prices increase slightly, or
raising the production ceiling so members can produce more in
the third and fourth quarters of 1987.
 REUTER
