By Arathy Somasekhar

HOUSTON, July 10 (Reuters) - Oil major Exxon Mobil ( XOM )

told its trading counterparts that it will not buy the

Mars crude oil grade until a zinc contamination issue is fixed,

two sources familiar with the matter told Reuters on Thursday.

Zinc contamination in the Mars crude oil stream has pushed

down demand and slashed prices for the flagship crude oil

produced off the U.S. Gulf coast, sources said earlier this

week.

Mars traded at a 10-cent premium on Thursday to crude oil at

the Cushing storage hub in Oklahoma, dealers said.

It had eased to a 10-cent discount earlier in the week

compared with a $1 premium at the end of June.

Exxon did not respond to requests for comments.

The Mars crude stream is a mix of oil from various

platforms off the coast of Louisiana.

Chevron Corp ( CVX ), which operates some of the

platforms that produce crude that are a part of the Mars stream,

said it was aware of zinc-related issues in Mars crude, and that

the company was currently working with the pipeline operator to

understand the cause.

Shell, which operates the main Mars platform and the

pipeline system that takes the crude to buyers, said on

Wednesday that tests determined that the product it contributes

to the Mars stream did not have any quality challenges.

Shell's Mars platform has been producing about 160,000

barrels per day for the last 12 months, according to research

firm Energy Aspects.

Zinc does not typically occur naturally in crude oil and

running crude with zinc could lead to damage to refining units

and to catalysts used in processing oil.