OIL PRICES RISE ON SAUDI EFFORT

  Crude oil prices rallied today, moving
  over 17.00 dlrs a barrel because of Saudi Arabia's determined
  effort to support prices, analysts said.
      "The Saudis and other OPEC nations are jawboning the market,
  hoping to restore confidence and prices and to do this without
  another meeting," said Sanford Margoshes, oil analyst with
  Shearson Lehman Brothers Inc.
      "But OPEC is not out of the woods yet by a longshot due to
  seasonal declines in demand and some cheating," he added.
      Oil industry analysts said Saudi Arabia has led the attempt
  to get other OPEC members to resist pressures to discount from
  the official prices agreed to last december.
      The analysts said that to get others to hold the line,
  Saudi Arabia pushed hard at the meeting of deputy oil ministers
  of the Gulf Cooperation Council last weekend and at the
  Cooperation Council oil ministers' meeting the previous week.
      The Saudis have also offered to support members having
  difficulty in selling their oil, analysts said.
      "They are trying to make sure that no one discounts, and to
  prevent that, it appears that Saudi Arabia or some other OPEC
  member will allocate some of their oil sales to help members
  that lose sales," Margoshes said.
      He added that the allocations would probably be in the form
  of loans to be repaid when these nations resume sales.
      Analysts said this would be useful in keeping in line
  nations like Qatar, which has had trouble selling oil. But it
  is also likely that such assistance would be provided to
  Nigeria which is under pressure to extend discounts.
      Analysts said that Saudi Arabia, with assistance from OPEC
  president Rilwanu Lukman, was trying to avoid an emergency OPEC
  meeting for fear that it would give the appearance that the
  December pact is falling apart.
      Daniel McKinley, oil analyst with Smith Barney, Upham
  Harris and Co said, "both physical and futures markets have been
  oversold and it only took a small spark to bring on a short
  covering rally."
      He believes an Iranian trade mission to Tokyo, which
  refused discounts to Japanese buyers, brought Japanese refiners
  into the market to cover their short positions.
      Oil traders said one japanese refiner came into the market
  to but 10 cargoes of May Dubai, which sent prices up on Mideast
  sours, with Dubai trading up to 16.50 dlrs after trading
  yeterray as low as 15.63 dlrs and then spilled over into the
  North sea crude oil market.
      Traders said that there have been persistent rumors today
  that Japanese buyers are looking to pick up cargoes of Brent
  for Japan and European trade sources indidate rumors of vessels
  being fixed to make such shipments.
      North sea brent today rose over 17.00 dlrs with trades
  reported as high as 17.05 dlrs, up one dlr.
      OPEC members' denials that they are producing over their
  quotas sparked moves to cover short postitions.
      Indonesian oil minister Subroto said today that OPEC
  production was below the 15.8 mln bpd quota agreed to last
  december but he gave no details on OPEC production against
  claims it was more at least one mln bpd above that level.
      "The production probably is about their quota level and
  largely because Saudi Arabia will not discount and canot sell
  its oil as a result," Margoshes said.
      Analysts have mixed opinions about the extent of the
  current rally. Some believe prices can continue to rise if
  Saudi Arabia and OPEC hold steady in a refusal to discount.
      But others said that despite the rally today there were
  still several fundamental factors, including demand, which
  could cut the rally short.
      Marion Stewart, an indepedent petroleum economist, said
  slow growth in the economies of the U.S. and OECD would keep
  demand for oil slack and he now estimates that demand to rise
  about 1.4 pct over 1986.
  

