Why is the Woodside Energy share price slumping 6% today?

What's causing the Woodside share price to slide?

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Key points

  • Woodside shares reverse their strong gains last month, trading 6.66% lower to $30.28 
  • The steep drop in oil prices this week is having a negative impact on the company's shares 
  • Investor fears are resurfacing regarding a possible recession in the near-term 

The Woodside Energy Group Ltd (ASX: WDS) share price is heading south on Wednesday despite no announcements from the company.

At the time of writing, the energy producer's shares are swapping hands at $30.28, down 6.66%.

Why are Woodside shares backtracking on Wednesday?

Investors are offloading the Woodside share price following a broader fall across the S&P/ASX 200 Energy (ASX: XEJ) index today.

Comprising 11 companies that operate in the oil, gas and coal sector, the index is shedding 5.55% to 9,593.2 points.

The price of oil slid to around US$100 per barrel as market fears re-emerged regarding a looming recession.

In particular, the West Texas Intermediate (WTI) has now fallen by almost 10% this week to US$99.99 per barrel.

Furthermore, the US dollar rose overnight as the Federal Reserve raises interest rates to cool down 40-year high inflation levels.

The central bank recently handed down a 0.75% interest rate hike that spooked financial markets. A more aggressive monetary tightening policy to combat inflation is sparking concerns about an impending recession in 2023.

Nonetheless, with oil prices backtracking, this will likely put a squeeze on Woodside's earnings for the short term.

Shares in fellow energy giant, Santos Ltd (ASX: STO) are also treading 4.68% lower to $7.13 apiece.

Woodside share price summary

Despite tumbling today, it has been a positive 12 months for the Woodside share price, up 25%.

When looking at year-to-date, its shares have further accelerated by 38% following the Russian war in Ukraine.

It's worth noting that the company's shares reached a 52-week high of $35.77 last month before tracking slightly lower.

In terms of market capitalisation, Woodside is the largest energy company on the ASX with a valuation of approximately $61.60 billion.

Motley Fool contributor Aaron Teboneras 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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