Australia's oil and gas stocks are acting as a weight on the broader share market today following a steep slide in oil prices overnight.
Brent oil slipped 4.9% to trade at US$59.54 a barrel, according to The Wall Street Journal, which comes after the resource posted its strongly monthly gain since May 2009. Brent crude rose 18% during February as bad weather impacted exports in Iraq, Kuwait and Russia, softening the world's oversupply problem. However, the weather is now improving and those exports are expected to resume.
While hundreds of oil rigs have closed across America in recent months, there are few signs of global production levels slowing down anytime soon. Although oil prices have enjoyed a solid six weeks, we could certainly see prices plummet again before conditions begin to improve.
Here's how the overnight fall is impacting our energy producers today:
- BHP Billiton Limited (ASX: BHP) has slipped 1.3%
- Sundance Energy Australia Ltd (ASX: SEA) is down 1.8%
- Santos Ltd (ASX: STO) has dropped 1.5%
- Woodside Petroleum Limited (ASX: WPL) sank 1%
- Origin Energy Ltd (ASX: ORG) fell 0.6%
- Liquefied Natural Gas Ltd (ASX: LNG) dropped 0.3%
Unfortunately, it is impossible to know which direction oil prices will go next while it's also impossible to tell whether prices will recover in the near-term or gradually over the long run. Given the risks and unpredictability of the industry, investors would still be wise to steer clear altogether.