Why are people watching the oil price right now?

These two ASX oil shares finished lower on Friday. Let's take a look at what some analysts think is ahead for the oil price.

| More on:
oil can falling over and spilling coins signifying fall in oil share prices

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The price of Brent crude oil finished off last Friday at $55.41, says Bloomberg, down 1.23% for the day. This means the oil price has dipped for two straight sessions and is an indication, according to the Wall Street Journal, that investors have ongoing concerns about the impact of COVID-19 on travel restrictions and general economic activity.

Let's consider two of the bigger ASX listed oil businesses and how they've been navigating fluctuations of the oil price. 

Oil Search Ltd (ASX: OSH)

The Oil Search share price surged earlier this month. This followed release of the company's FY20 interim result. As stated in the results, Oil Search produced 14.7 million barrels of oil equivalent (mmboe) for the half year ended 30 June 2020.

The Oil Search share price jumped more than 5% following this announcement to trade around $4.10 a share that day. Last week, Oil Search finished off at $4.35 

Back in November, the company announced that it has started the search for a new chief financial officer (CFO). The current CFO, Stephen Gardiner, will continue in the role until 31 May 2021.

For the previous 12-month period, the Oil search share price has dropped more than 42%.

Santos Ltd (ASX: STO)

Santos was downgraded by Citi a week ago from 'buy' to 'neutral' based on a bouncy share price and lack of catalysts. If the analysts feel like they're not getting enough information from a company, this is what can happen. Potentially impacting the Santos share price.

Back in December, the Australian Financial Review mentioned that Santos was preparing to kick off $8.5 billion worth of oil and gas projects. This includes the $US2 billion Dorado oil project in Western Australia. 

Credit Suisse analyst Saul Kavonic said that the company's approach to growth "seems sensible". 

The Santos share prices has dropped more than 18% over the past 12-month period.

Will US politics and COVID-19 swing the oil price?

US president Joe Biden didn't waste any time signing executive orders that bring very different positions to effect than what we saw from his predecessor Donald Trump. The Australian Financial Review reported that Mr Biden cancelled the Keystone XL pipeline and implemented a 60-day suspension of new oil and gas leasing permits.

As countries continue being ravaged by COVID-19, the impacts continue to hit the travel industry. According to this weekend's Australian, the lack of international visitor's is currently costing Australia's tourism industry about $4 billion a month.

Regardless of these influences, one Credit Suisse analyst believes that oil can hit $US196 a barrel. Credit Suisse's impression is that the current business environment could present a buying opportunity, and it predicts the price is on the way up.

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »