Traders in all major world markets see no relief in sight for beleaguered crude oil prices, which continue to fall as plentiful supply and sluggish demand more than offset OPEC's recent pledge to cut fourth-quarter output.

Preliminary reports pointing to overproduction by some OPEC members are only adding to the bearish tone, although some traders said a modest technical rebound in futures prices after recent losses might be around the corner.Traders, however, are noting a shift in global demand patterns caused by new U.S. air-quality rules.

As U.S. refiners seek to increase output of the low-sulfur diesel fuel required for highway use as of Oct. 1, they are buying more North Sea Forties crude and similar crudes, while putting out more reformate, which is being exported to the Far East.

Although certain grades may get a boost from new U.S. air-quality rules, traders said overall fundamentals will stay pressured by poor refiner demand in Europe and Japan and a recent drop in refinery operations in the United States, which may continue depending on the pattern of U.S. refining margins.

"I would be hard pressed to find fundamental reasons to be bullish," said a London analyst.

Moreover, the chance of a breakthrough in United Nations-Iraq relations looms in mid-November, when Iraqi Deputy Prime Minister Tariq Aziz is set to visit U.N. headquarters in New York for more arms talks and to lobby for a quick lifting of the oil embargo against Iraq.

New York Mercantile Exchange spot December crude futures plunged Friday to a low of $16.85 a barrel, down nearly $2.30 from highs reached after the Organization of Petroleum Exporting Countries announced in late September it would cut output to 24.52 million barrels a day in the fourth quarter. The

December contract recouped some of the losses but weakness prevailed late Tuesday as the contract slipped again to $17.04 a barrel after rising to $17.45 Monday.

OPEC's cut, which was initially received as bullish, now is seen as not being substantial enough to offset poor global demand and other bearish factors such as increasing output of crudes from the North Sea.

On top of that, a preliminary report released by Petroleum Intelligence Weekly on Friday estimated OPEC was producing 400,000 b/d over its quota, although half that number was attributed to Iraq, which is under embargo.

An OPEC Secretariat official said he was confident the agreement is being adhered to, and cautioned against trading on October data until a clear picture of the full month's production is available.

Either way, traders noted that supplies still appear plentiful, which is particularly discouraging since the market is entering what is traditionally the peak demand period during the U.S. winter. If prices are soft now, they reason, what will happen when demand drops again in the first quarter?

The International Energy Agency recently projected the fourth-quarter call on OPEC crude and stocks to be 25.5 million b/d, dropping to 24.6 million b/d in the first quarter.

In Asia, traders said East Asian refining margins favor processing of either heavy or extra-light crudes. "As of Thursday, margins for heavy grades were about 40 to 50 cents a barrel better than for medium or light grades," said one analyst.

Demand is relatively poor, however, as Japanese refiners are likely to process 4 percent to 5 percent less crude in the fourth quarter than in the third quarter, refining sources said.

South Korean and Japanese refiners are eager to buy extra-light crudes to maximize production of gasoline and kerosene, while they want heavy grades

because they are relatively cheap compared with light and medium grades, one trader said.

Traders said, however, that this may change as an influx of cargoes of fuel oil from the Middle East depresses Singapore fuel oil prices.

In products trading, market participants see fairly steady shipments of both gas oil (diesel) and gasoline moving from the U.S. Gulf and West Coast to East Asia. These shipments are helping to support the products markets in the United States, they said.