The S&P/ASX 200 Index (ASX: XJO) is giving back some of yesterday's gains. The benchmark index is currently down 0.6%.
With crude oil prices down sharply overnight, ASX 200 shares in the energy sector are seeing even greater selling pressure today.
The Woodside Petroleum Limited (ASX: WPL) share price, for example, is down 3.79% in afternoon trading. Meanwhile, Santos Ltd (ASX: STO) shares are down 4.77% while the Beach Energy Ltd (ASX: BPT) share price has dropped 3.89% today.
All told the S&P/ASX 200 Energy Index (ASX: XEJ) is down 3.45% at the time of writing. That's more than five times the loss being experienced by the ASX 200.
Why are crude oil prices falling?
Brent crude oil dropped 3.9% overnight to US$103 per barrel, according to data from Bloomberg.
That's a big 24-hour fall. And Brent crude is now down almost 20% from the US$128 per barrel it was fetching this time last week.
That's seen ASX 200 shares in the energy sector fall 7.2% over the past week, even as the ASX 200 gained 1.3%.
So, what's causing the latest retrace in crude oil prices?
Firstly, news that Ukraine and Russia were engaged in a new round of ceasefire discussions looks to offer a glimmer of hope that the war may end sooner than later.
Oil-rich Russia's invasion of neighbouring Ukraine caused crude oil prices to rocket, reaching 14-year highs earlier this month. Should negotiations prove successful, energy prices are likely to trend lower.
Adding to the pressure on crude oil prices is a resurgent outbreak of COVID-19 in China.
China is the world's biggest importer of crude oil. It is also among the few nations still actively pursuing a zero-virus policy.
With numerous new COVID cases appearing, driven by the Omicron variant, China has locked down the city of Shenzhen and the province of Jilin. Should those lockdowns persist, or spread, it could have a major impact on energy demand and see further downward pressure on crude oil prices.
How have these 3 ASX 200 shares been performing?
Despite the big fall in crude oil prices over the past week, the three ASX 200 shares named above remain well up so far in 2022.
The Santos share price trails the pack with an 8.4% year-to-date gain. Beach Energy shares have gained 17% in that same time while the Woodside share price leads the pack, up 35% since the opening bell on 4 January.
For some context, the ASX 200 is down 6.5% in 2022.
