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.