ASX 200 energy shares are collectively one of the few brights spots on Monday, following a broad-based market sell-off.
The S&P/ASX 200 Index (ASX: XJO) reversed last Friday's gains, sliding 0.45% to 7,286. Most sectors are in red, with heavy selling taking place across information technology, healthcare and real estate sectors.
By comparison, the S&P/ASX Energy (ASX: XEJ) index is trading 0.81% higher, with most of its constituents in positive territory.
The Woodside Petroleum Limited (ASX: WPL) share price has managed to eke out a small gain of 0.28% to $25.42. Shares in the largest ASX-listed oil and gas player are currently hovering around 7-month highs.
Santos Ltd (ASX: STO) is up 0.95% to $7.45, a price not seen for 3 months.
The Oil Search Ltd (ASX: OSH) share price is trading 1.77% higher to $4.59, its highest level since March 2020.
Beach Energy Ltd (ASX: BPT) is perhaps the best performing ASX 200 energy share. In early morning trade today Beach Energy shares rallied 3.8% to a 5-month high of $1.50.
What's driving ASX 200 energy shares?
Oil prices continue to gather momentum, rallying to fresh 7-year highs.
The United States benchmark, West Texas Intermediate (WTI), has cracked the US$80 a barrel mark. While the global benchmark, Brent Crude, is trading 0.51% higher at a 3-year high of US$83 a barrel.
Oil prices rallied last Friday after the US Department of Energy spokesperson said that the agency had no plans to tap into strategic petroleum reserves to help ease tight supplies.
"An acceleration in gas-to-oil switching could boost crude oil demand used to generate power this coming northern hemisphere winter, however, the US may be heading into winter with its lowest stockpiles of heating oil for decades," ANZ research analysts said, according to S&P Global.
Market dynamics for oil are expected to remain tight after the Organization of the Petroleum Exporting Countries and Russia (OPEC+) decided to stick to its existing plan to increase output by 400,000 barrels a day last week.
This is amid the recent supply-side disruptions caused by Hurricane Ida. Not to mention rising demand amid an energy crisis in China and gas shortage in Europe.
