S&P/ASX 200 Index (ASX: XJO) energy shares are dropping lower today.
Well, most of them.
That's seeing the S&P/ASX 200 Energy Index (ASX: XEJ) down by 2.67% after lunch even as the ASX 200 surges by 1.62%.
We won't cover off all the ASX 200 energy shares in this article. But here are how four of the top companies are performing today:
- Santos Ltd (ASX: STO) shares are down 0.32%
- Beach Energy Ltd (ASX: BPT) shares are down 1.05%
- Woodside Energy Group Ltd (ASX: WDS) shares are down 5.4%
- Whitehaven Coal Ltd (ASX: WHC) shares are up 0.53%
What's going on?
What are investors in ASX 200 energy shares considering today?
First, let's address two of the ASX 200 energy share outliers.
You likely noticed the outsized losses posted by Woodside today. While some of that's due to the market forces pressuring the other oil and gas companies, Woodside shares are also trading ex-dividend today.
Following a strong half year, Woodside declared a US$1.09 per share interim dividend. Investors buying shares today are no longer entitled to that payout, and the share price is falling to reflect this.
You also likely noticed that Whitehaven Coal is bucking the selling trend. While coal prices retraced by 2.5% overnight, Newcastle coal is still fetching a whopping US$439.00 per tonne. That same tonne was trading for around US$140 on 1 January this year.
As for the other ASX 200 energy shares, they're coming under pressure from sliding oil prices. And unlike coal, oil prices are falling back towards their January levels.
West Texas Intermediate (WTI) crude is trading for US$82.66 per barrel. While that's edged higher over the past few hours, WTI is down from US$87.39 on Wednesday and down from US$123.70 on 8 March shortly after Russia's invasion of Ukraine.
WTI kicked off 2022 trading for US$76.08.
Why are oil prices falling?
Oil prices, and by connection many ASX 200 energy shares, are falling in part due to growing concerns of a looming recession in Europe.
Investors are also worried about the potential economic slowdown hampering oil demand in China. The Middle Kingdom is sticking to its COVID-zero policies, which is seeing as many as 65 million people in lockdown or with other travel restrictions.
According to Fenglei Shi, a Beijing-based director of S&P Global Commodity Insights (courtesy of Bloomberg), "We expect that gasoline, diesel, and jet fuel demand over September and October will continue to fall short of pre-COVID levels."
Crude prices are sliding despite OPEC+ announcing on Monday that the cartel would slash 100,000 barrels per day (bpd) from its production target commencing next month. That fairly token reduction cancels out the 100,000 bpd increase OPEC+ pledged in September.
Looking ahead, crude prices and ASX 200 energy shares could be supported by a strong outlook for the United States economy.
Ed Moya, senior market analyst at Oanda said (quoted by Bloomberg), "WTI crude should hold $80 given how strong the US economy remains and now that most of the demand shock from China's deteriorating COVID situation has been priced in."
How have these ASX 200 energy shares been tracking?
Covering off the four ASX 200 energy shares named above, the Santos share price is up 17% in 2022; Beach Energy shares have gained 26%; the Woodside share price is up 41%; and Whitehaven Coal shares have rocketed 210%.
For some context, the ASX 200 is down 10% year to date.
