But discount levels will prevail in the light Middle-east crude market as stocks remain high despite news of cuts in Abu Dhabi crude term liftings, they added.

"The Abu Dhabi term cuts are not going to lead to tightness because there are still a lot of supplies available," said a trader with a Japanese oil company.

Last week, Abu Dhabi told its customers that all term liftings in August would be reduced by five percent in line with the Opec agreement to cut output.

This is the first term volume cuts by Abu Dhabi.

For July, Oman, Saudi Arabia and Qatar informed buyers of cuts in term liftings ranging from three percent to eight percent, but Abu Dhabi volumes for July were intact.

Abu Dhabi crudes are rich in gas oil and kerosene, used in winter as heating oil.

But traders said that North Asian demand for kerosene was in a seasonallull as summer begins and refiners were not anxious to cover the fall in Abu Dhabi crude availabilities.

On Monday, August cargoes of Abu Dhabi Murban was trading at a discount of around seven cents to the official ADNOC price.

Although the prices were slightly stronger than the 14 cents discount seen last week, traders said it was mainly because equity producers held the remaining August cargoes and could command higher prices.

But with North Asia expected to experience a hot summer this year, the demand for heavy Asian crudes, most of which come from Indonesia, will benefit from increased use of air-conditioners, traders said.

Many utilities in Japan and South Korea use heavy regional crudes for direct burning for power generation. Indonesian heavy Widuri cargoes are trading at premiums of 40 cents per barrel to the official Crude Price (ICP), traders said.

This compares to ICP +18 cents traded for July.

"The market will be strong because of the utility buying, and the supplies may not be thatmuch as well," said a trader with a Japanese oil company.Traders said they were watching for a potential fall in Indonesian exports for August following a full start-up of the 125,000 barrels-per-day (bpd) Balongan refinery planned for mid July.

Technical problems had led to the shutdown of Balongan's residue catalytic cracker (RCC) and a reduction in operating rates of its crude distillation unit.

The refinery had been scheduled for a full start up in early July, but was delayed as repairs took longer than expected.

Indonesian state oil company Pertamina is due to announce its monthly August export allocations later this week.