How is the oil price plunge impacting ASX 200 oil shares today?

Oil shares are falling hard on Wednesday. Here’s what’s happening…

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Key points

  • It has been a very red day for energy shares on Wednesday
  • This follows a sharp pullback in oil prices overnight
  • The energy sector is weighing heavily on the ASX 200 index today

One area of the market that is a sea of red on Wednesday is the energy sector. At the time of writing, the S&P/ASX 200 Energy Index is down a sizeable 5.5%.

This follows a significant pullback in oil prices overnight, which is weighing heavily on ASX energy shares.

According to Bloomberg, the WTI crude oil price fell more than 10% before eventually closing the session 8.2% lower at US$99.50 per barrel. The Brent crude oil price ended the session 9.45% lower at US$102.77 a barrel.

Traders were selling oil in a panic amid concerns that a global recession could lessen demand for energy products.

Which ASX oil shares are falling today?

You will be hard-pressed to find an ASX oil share performing positively on Wednesday.

Here’s a summary of how some shares are performing in the energy sector:

  • The Beach Energy Ltd (ASX: BPT) share price is down 7%
  • The Santos Ltd (ASX: STO) share price is down 5%
  • The Woodside Energy Group Ltd (ASX: WDS) share price is down 7%

What’s next for oil prices?

Where oil prices, and therefore ASX oil shares, go next will depend ultimately on what happens with the global economy.

For example, a note out of Citi warns that yesterday’s decline could be a sign of things to come if the global economy falls into a recession. Its analysts are forecasting a decline into the US$60s a barrel if a recession occurs.

Citi said: “In a recession scenario with rising unemployment, household and corporate bankruptcies, commodities would chase a falling cost curve as costs deflate and margins turn negative to drive supply curtailments.”

Motley Fool contributor James Mickleboro 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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