S&P/ASX 200 Index (ASX: XJO) energy shares retreated on Thursday as oil prices fell sharply overnight.
Western Texas Intermediate tumbled US$2.8 or 3.5% overnight from intraday highs of US$79.76 to US$76.91 a barrel. The global benchmark, Brent crude, briefly hit 3-year highs of US$83.45 a barrel before closing the session 3.15% lower at US$80.82.
ASX 200 energy shares and oil prices retreat
The S&P/ASX Energy (INDEXASX: XEJ) index is down 1.02% on Thursday, despite every other sector sitting in positive territory.
The Woodside Petroleum Limited (ASX: WPL) share price is down 0.36% to $24.94.
The Oil Search Ltd (ASX: OSH) share price is down 1.32% to $4.49.
Santos Ltd (ASX: STO) is the biggest loser today down 1.75% to $7.30.
While Beach Energy Ltd (ASX: BPT) is also down 1.61% to $1.40.
Despite a small pullback today, the ASX energy index is up 2.06% in the last five days and up 16.7% in the last month.
What's next for oil?
Market participants are bullish on the near-term outlook for oil amid rising demand and tightening supply, according to S&P Global.
Oil prices jumped this week after the Organisation of the Petroleum Exporting Countries and allies, known as OPEC+ reaffirmed its existing plan to increase output by 400,000 barrels a day every month until at least April 2022.
Market participants were expecting an increase given supply-tight conditions and an ongoing energy crisis in Europe and China.
Another tailwind for oil was raised by analysts at Australia and New Zealand Banking Group Ltd (ASX: ANZ). Its report said that the recent jump in LNG and coal prices could encourage industrial and power generation sectors to switch to oil instead.
S&P Global said that the market will look at the United States Energy Information Administration (EIA) report due for release on 6 October for "further pricing cues".
