Why are ASX 200 energy shares dragging on the market today?

Oil prices are likely dragging the ASX 200 energy sector down them them on Friday.

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Key points

  • The ASX 200 energy sector is the market's worst performer on Friday, slipping 1.4% 
  • It comes on the back of lower oil prices, which recorded their first monthly fall of 2022 in June 
  • The share prices of Woodside Energy, Worley, and New Hope are leading today's downturn 

The S&P/ASX 200 Index (ASX: XJO) is in the green despite a notably poor performance from energy shares on Friday.

Right now, the S&P/ASX 200 Energy Index (ASX: XEJ) is down a whopping 1.38%.

For context, the ASX 200 is recording a gain of 0.35% at the time of writing.

Interestingly, the energy sector’s downfall is being led by some of its most renowned names.

Perhaps unsurprisingly, much of the turnaround is seemingly being driven by falling oil prices. Let’s take a look.

Energy shares dragging on ASX 200

The ASX 200 energy sector is in the red on Friday after oil prices tumbled despite continuous supply concerns overnight.

The price of Brent crude oil fell 1.2% to reach US$114.81 a barrel in Thursday’s session overseas while the West Texas Intermediate oil price tumbled 3.7% to US$105.76 a barrel.

It marks the first time in 2022 that oil prices recorded a month-on-month fall. WTI oil futures slumped 7.8% in June, according to Trading Economics.

The fall came after OPEC+ nations announced they would only increase August output by as much as was previously flagged, reports Reuters. That will see an additional 648,000 barrels per day hit the market.

That’s despite expectations that supply of the black liquid could tighten in the face of export halts, political disruptions, and strikes in Libya, Ecuador, and Norway.  

The commodity’s fall is likely weighing on the share prices of oil-producing companies including Santos Ltd (ASX: STO), Woodside Energy Group Ltd (ASX: WDS), and Worley Ltd (ASX: WOR). They’re currently down 1.4%, 2.2%, and 2.4% respectively. That of Beach Energy Ltd (ASX: BPT) is also down 0.6%.

Coal producing shares of New Hope Corporation Limited (ASX: NHC) and Whitehaven Coal Ltd (ASX: WHC) are also falling 3.1% and 1.6% respectively right now.

Motley Fool contributor Brooke Cooper 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 Scott Phillips.

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