Why ASX 200 energy shares are tanking on Thursday

It hasn’t been the best of days for ASX energy shares.

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sad looking petroleum worker standing next to oil drill

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ASX 200 energy shares are on the back foot following a sharp two-day selloff for oil.

West Texas Intermediate has slumped around 4% since Wednesday, down to US$80.90 a barrel. The global benchmark, Brent crude, is posting similar declines, down to US$82.56 a barrel.

Following suit, Woodside Petroleum Limited (ASX: WPL) is down 2.2% on Thursday to $23.73.

Santos Ltd (ASX: STO) is edging slightly lower, down 1.1% to $7.15.

The Oil Search Ltd (ASX: OSH) share price is also posting a small loss, down 1.2% to $4.40.

While Beach Energy Ltd (ASX: BPT) is down 1.39% to $1.42.

What’s driving ASX 200 energy shares lower?

Oil has eased from multi-year highs amid profit-taking as prices are now reaching overbought territory, according to S&P Global Platts.

“… crude oil prices have posted gains for the past nine weeks, with the Relative Strength Index on a daily chart for the NYMEX contract showing oil prices sitting squarely in overbought territory. Analysts have said that at current levels, oil prices were due for some profit-taking.”

In addition, it flagged that data from the American Petroleum Institute reported a 2.32 million-barrel build in US commercial crude oil stockpiles last week. While economists were expecting a build of around 1.7 million barrels.

Despite a small pullback, analysts remained bullish about a persistent supply imbalance and ongoing energy crisis across Europe and China.

“The energy crisis could maintain a bullish momentum in crude for the coming days and weeks, interrupted by small pullbacks,” said Vandana Hari of Vanda Insights.

“The bottom line is that the bullish narrative has taken a strong hold and despite a fair amount of speculative froth in crude, there is nothing on the horizon so far to trigger a correction.”

Despite a small pullback for ASX 200 energy shares, most have enjoyed a strong rally in the past two months thanks to surging oil prices.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

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