OIL MARKETS SHOW RESPECT FOR NEW OPEC ACCORD
  OPEC has shown itself to be in control
  of the world oil situation with its speed in hammering out a
  pact to limit crude oil output to 16.6 mln barrels per day
  (bpd) for the rest of 1987, oil traders said.
      They said market respect for the cartel has increased since
  it announced Saturday that it would cut fourth quarter output
  to 16.6 mln bpd from the 18.3 mln agreed in December.
      "There are light oversupplies now, but OPEC ... Has ensured
  there will be no oversupplies in the fourth quarter, and is in
  effect putting pressure on end-users," a European crude oil
  trader said.
      In Tokyo, one oil analyst said, "There's no reason to expect
  a weak market from now on."
      A Japanese oil trader, also based in Tokyo, said, "We
  thought OPEC would have difficulty agreeing on fourth quarter
  production so the market will react very bullishly."
      Traders in Singapore said that while there has been only a
  slight increase so far in spot quotes for Dubai, a benchmark
  crude, they expect price increases over the next few days.
      August Dubai was discussed in cautious early activity at
  around 17.35 dlrs, above Friday's 17.15-20 range, but still
  below the government selling price (GSP) of 17.42.
      Even prices of light Mideast grades, such as Qatar and Abu
  Dhabi crudes, are expected to improve from recent weak
  positions, 15 to 20 cents below their GSP's. Singapore traders
  said sellers might now aim for GSP's at least.
      They said that after initial jumps, they expect prices to
  stabilise and hover around GSPs for the next few months.
      They said the Japanese oil market would be most affected
  and Japanese end-users would need to rebuild stocks for winter
  requirements before October.
      Prices are most likely to rise in the fourth quarter on
  European and U.S. Stockbuilding for winter, they added.
      "There's no doubt consumption will be higher than production
  by the fourth quarter and stocks are not that high," said an
  international trader in Tokyo. Another Tokyo trader was less
  bullish, "For sure there will be some shortage but it depends on
  how much they (OPEC members) cheat."
      A Singapore trade source said, "There is enough cheating and
  leakage in the OPEC sales system to convince traders there is
  no need to worry about shortages."
      Other traders said the questionable Iraqi production level,
  after Iraq's rejection of its assigned quota, was a bearish
  factor to be considered.
      Traders also said end-users now would buy as much as
  possible on term contracts and buy spot only when the market
  cooled from its initial reaction to the OPEC agreement.
      Spot product prices in Singapore were little changed in
  thin early discussions, with naphtha and middle distillates
  quiet on minimal buying interest.
      Fuel oil products were steady to firm on light demand and
  tight prompt supplies, dealers said.
  

