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Oil share prices slump
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September 21, 1999: 8:56 a.m. ET
OPEC pledges to hold output down; analysts fear high prices unsustainable
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LONDON (CNNfn) - Petroleum shares slumped Tuesday despite expectations that global oil producers will maintain the production cuts that have doubled oil prices this year.
Oil prices have pushed above $23 a barrel over the past month as the 7 percent production cut agreed to in March by members of the Organization of Petroleum Exporting Countries (OPEC) has slashed global inventories.
However, though OPEC members meeting in Vienna Wednesday are expected to maintain lower output, doubts have emerged about the sustainability of the high oil prices.
In London, traders reacted to the concerns by marking down heavyweight oil stocks, which pulled the benchmark FTSE 100 down in their wake. Shell Transport (SHEL) lost 3.8 percent while BP Amoco (BP.A) slid 2.3 percent.
In Paris, merger partners Elf Aquitaine (PAQ) and TotalFina (PPQ) both lost 3.4 percent.
Oil stocks had climbed sharply as the higher prices improved profits following poor 1998 results for most of the major producers. Shares have recently succumbed to selling pressure despite evidence that compliance with the OPEC cuts remains at 82 percent.
There are fears that some OPEC members and non-OPEC producers may break ranks, boosting output above agreed-on levels to maximize revenue while prices are high.
Moreover, the lower supply as the northern hemisphere winter approaches has led some analysts to predict oil prices pushing up to $25 or more, stoking inflationary pressures at a time when global economies are improving.
Kuwait, the most hawkish member behind the supply cuts, has pushed for supplies to be limited through next March and has been backed by Saudi Arabia and Iran. Russia, which isn't an OPEC member, has pledged to restrict its own output
In London, Brent crude futures for December delivery dipped to $22.48 a barrel from Monday's close of $22.66. 
-- from staff and wire reports
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