The Santos Ltd (ASX: STO) share price opened sharply lower this morning and remains down 1.95% in early afternoon trading.
Santos shares closed yesterday trading for $7.94 each and are currently trading for $7.785 a share.
Why is the ASX 200 energy share under pressure?
It's not just Santos that's under selling pressure today.
Following another day of selling in US markets yesterday (overnight Aussie time), the S&P/ASX 200 Index (ASX: XJO) is down 1.36% at the time of writing.
The Santos share price is likely underperforming the benchmark index today as investors digest the weakening outlook for oil prices, which sees the S&P/ASX 200 Energy Index (ASX: XEJ) down 2.77%.
Brent crude oil slipped 1.3% over the past 24 hours to US$91.62, the lowest level since early February.
West Texas Intermediate (WTI) crude fell even more. WTI is down 1.7% over 24 hours, trading for US$85.46 per barrel. You have to go back to 24 January, well before Russia's invasion of Ukraine, to find WTI trading at a lower price.
Oil prices, and by extension the Santos share price, are being pressured on several fronts. This comes despite OPEC+ stating last week that the cartel would cut production levels.
First, investors are concerned about a broader economic slowdown crimping demand energy demand in oil-hungry Europe and the US.
Second, China's COVID-zero policies look set to continue. These policies currently have some 65 million people facing travel restrictions, reducing demand for oil in the world's most populous nation.
Commenting on the headwinds facing the oil market, market strategist at IG Asia Yeap Jun Rong said (courtesy of Bloomberg):
Having priced for the OPEC+ output cut with a short-lived up-move, oil prices continue to struggle with the weaker demand outlook story. Headlines of China's virus restrictions renewed the downward bias over the demand outlook, with an added headwind for oil prices coming from further strength in the US dollar.
Santos share price snapshot
Despite today's retrace, the Santos share price remains up 18% in 2022. That compares to a year-to-date loss of 11% posted by the ASX 200.
