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 OPECs 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 Opecs 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. Opecs March production was 14.6 mln bpd 1.2 mln below its ceiling with Saudi Arabias 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. Indonesias 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.
OIL PRICES SEEN HOLDING STEADY IN SECOND QUARTER