The Oil Search Ltd (ASX: OSH) share price has been struggling recently despite the price of oil increasing.
After hitting a low of US$68.62 10 days ago, the price of Brent Crude Oil is currently US$74.70 per barrel.
The WTI Crude Oil price has followed a similar trajectory, hitting US$66.42 on 19 July before rebounding to trade for US$72.35 per barrel today.
Oil Search’s shares originally gained alongside oil. They increased 11% between 19 July and 22 July.
However, they’ve fallen 4.66% since. The Oil Search share price is currently $3.89, 0.77% lower than yesterday’s close.
Let’s take a look at what might be driving oil prices up, and what’s likely weighing on Oil Search.
What’s up with Oil Search?
The Oil Search share price is dropping despite good news for oil prices.
According to reporting by Reuters, the United States’ crude oil inventories are falling faster than was predicted.
The publication states crude inventories fell by 4.1 million barrels over the course of last week, with some analysts believing OPEC+’s agreement to increase supply won’t cut it.
Additionally, Reuters reported that the increasing numbers of COVID-19 cases worldwide have hampered oil production, while long-term recovery from the pandemic will likely increase demand.
All this is putting upwards pressure on the price of oil.
At the same time the oil price is rising, Oil Search is facing uncertainty.
First off, the company has seemingly entered a bidding war with Santos.
The Oil Search share price gained 3.5% on the back of the merger’s rejection.
Now, it looks like the companies will begin fighting in the hopes that Santos can offer a price Oil Search deems worthwhile. In fact, earlier this week, Oil Search’s interim CEO Peter Fredricson said that the company wants “more carats in the diamond ring”.
And all the while, Oil Search is without a long-term leader after its former managing director Dr Keiran Wulff walked out on 19 July.
According to the company, its board had faced problems with Wulff’s behaviour. Wulff was also said to have left due to health issues.
The Oil Search share price increased substantially on the day of Wulff’s departure. It closed 6.2% higher than the session prior.
Oil Search share price snapshot
Oil Search is in the ASX green by the skin of its teeth.
Right now, it’s 3.3% higher than it was at the start of 2021. It has also gained 29.8% since this time last year.