UPDATE 2-Abu Dhabi deepens April crude supply cuts to Asia

(Adds comments, details, table)

By James Topham and Osamu Tsukimori

TOKYO, Feb 26 (Reuters) - OPEC member United Arab Emirates
deepened its curbs on crude oil supply to Asia in April,
surprising traders and giving a possible signal that the oil
cartel could cut production further at its March meeting.

OPEC members have been trimming supply to refiners in line
with agreed output cuts, but this has not been enough to stop
oil prices sliding by over $100 a barrel since a peak in the
middle of last year.

Various cartel members have signalled that further cuts
could be agreed at the group's next meeting in March, and
traders will be watching to see if OPEC kingpin Saudi Arabia
makes cuts to its April allocations.

"I think the chances are high that OPEC will cut output
further as demand is slow," said Osamu Fujisawa, an oil
economist at industry consultants FE Associates.

"Because the second quarter is a non-demand season in which
many refinery turnarounds are scheduled, steady supplies would
be a little extra."

In a statement on Thursday, Abu Dhabi National Oil Co
(ADNOC), the main supplier for the UAE, said it will supply its
customers with less of its flagship Murban crude and three
other main grades in April than it did in March.

The move came as a surprise to traders, who had expected
the UAE to keep April supply curbs largely unchanged from
March.

"Without a further OPEC cut agreement from the (upcoming)
assembly, I was expecting a similar range of cuts to March,"
said one trader.

The state oil firm ADNOC said it will supply 15 percent
below contracted volumes of middle-distillate rich Murban in
April, compared with a 10 percent cut in March.

Supplies of Lower Zakum and Umm Shaif crudes will be cut by
15 percent in April versus a 10 percent cut in March, while
Upper Zakum will be cut by 17 percent versus a 15 percent cut
in March.

"For Murban, the supplies had been cut by 15 percent (in
February), so the cut was within expectations," said a trader
with a North Asia-based refiner.

"Upper Zakum's 17 percent cut, however, was a surprise.
Lower Zakum and Umm Shaif's 15 percent were also the biggest
cuts since November and are larger than expected. This will
also have an impact to our spot crude purchase plans."

The deeper cut to Upper Zakum, a medium heavy crude,
follows the example of top exporter Saudi Arabia and other OPEC
suppliers who have centred production cuts on heavier crudes.

"Marketing issues probably factored into the cuts, the idea
being it's better to cut production of cheaper crudes than ones
that sell higher," said one trader.

Allocations from Saudi Arabia for April will be made early
next month, and will provide an indication of the OPEC
heavyweight's stance for the March meeting after it had cut
allocations ahead of a December OPEC supply curb agreement.

ADNOC also said it will continue to keep shipping limits on
exports in place for April, depriving buyers of the option to
load an additional 5 percent above contracted volumes on each
cargo, a standard industry practice known as "operational
tolerance".

Since September the cartel has decided to lower supply by a
total of 4.2 million bpd, about 5 percent of daily world
demand, and several OPEC members have signalled that the group
may reduce production further when it meets again next month to
decide oil output policy.

Following are the cuts in ADNOC term crude supplies to
Asian lifters since November 2008.

Nov 08 Dec 08 Jan 09 Feb 09 Mar 09 Apr
09
Murban - % 15 % 15 % 15 % 10 % 15
%
Lower Zakum - % 10 % - % 10 % 10 % 15
%
Umm Shaif - % 5 % - % 10 % 10 % 15
%
Upper Zakum 5 % 5 % 3 % 15 % 15 % 17
%
(Reporting by James Topham and Osamu Tsukimori)