A wire service article in the Business section yesterday incorrectly identified Oman as a member of the Organization of Petroleum Exporting Countries. (Published 1/13/88)

Oil prices skidded 56 cents a barrel on the New York Mercantile Exchange yesterday and seesawed on European markets amid reports OPEC leader Saudi Arabia and other Gulf producers are discounting their oil to retain customers.

In Nicosia, Cyprus, the Middle East Economic Survey said most Western buyers are "showing no interest" in buying Gulf oil "at anywhere near the official prices" set by the Organization of Petroleum Exporting Countries.

The authoritative oil journal said Saudi Arabia, OPEC's largest producer, is selling its oil at market-related prices to the four U.S. partners in the Arabian-American Oil Co. at a discount of about $2 a barrel off the cartel's $18-a-barrel benchmark price.

The four Aramco partners -- Exxon Corp., Mobil Corp., Texaco Inc. and Chevron Corp. -- buy 1.3 million barrels of crude a day from Saudi Arabia, the world's largest oil exporter.

Selling accelerated on the Mercantile Exchange after reports surfaced later in the day that Kuwait, another Gulf member of OPEC, is offering discounts to Japanese customers of 50 cents a barrel. Industry sources said it also appeared Saudi Arabia was extending discounts to Japanese buyers.

"The reports that the Saudis and Kuwaitis are offering discounts to their customers put psychological pressure on the market," said Peter Beutel, analyst at Elders Futures Inc. in New York.

In New York, West Texas Intermediate -- the benchmark U.S. crude for immediate delivery -- tumbled by 56 cents to $16.75 a barrel in active trading.

Home heating oil for February delivery plummeted by 1.97 cents to 51.76 cents a barrel and unleaded gasoline lost 1.29 cents to 44.02 cents a gallon.

"Another factor that influenced prices is the moderating weather that has been forecast for later this week," Beutel said.

On the U.S. Gulf Coast spot market, where oil is sold to the highest bidder, West Texas intermediate fell 15 cents to $17.10 a barrel.

The Middle East Economic Survey, or MEES, which has close ties to Saudi Arabia, said four of OPEC's Gulf producers -- Iran, Iraq, Qatar and Oman -- have "gone fully to market-related pricing."

Saudi Arabia, Kuwait and Abu Dhabi are "endeavoring to stick to official prices," but the Saudi policy of selling its oil at OPEC-mandated levels applies only to non-Aramco clients, MEES said.

On the European spot market, the United Arab Emirates' Dubai light -- the key OPEC crude from the Gulf -- inched up 5 cents to $15.30 a barrel.

Oil prices plunged to as low as $15 a barrel immediately after OPEC decided at its December meeting to extend its $18 benchmark price and production quotas through the first half of 1988. The 13-nation cartel took no action to end price discounting or curb excess production.

Oil traded on the volatile world market now is selling for about $2 a barrel less than OPEC's official prices.

"The market has been up and down so much recently that the trend is not clear at this point," Beutel said.