Unlike its year-to-date performance, the Woodside Energy Group Ltd (ASX: WDS) share price has put on an underwhelming show so far this week.
Today, shares in the oil and gas producer are making their way lower again. As we head into the afternoon, Woodside is down 0.5% to $32.67 apiece, contrasting with the 0.56% gain in the S&P/ASX 200 Index (ASX: XJO).
As a result, the Woodside share price is now 3.9% behind its Friday closing price.
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Oil prices go for a slip
When in the business of selling commodities, such as oil and gas, price is everything.
The difference between the cost for a company to extract it and the price it can sell it for determines the success of the operator. Hence, when the price of oil makes a move it tends to be reflected in the Woodside share price.
At the end of last week, the price per barrel of oil was hovering around US$85. Now, a barrel of crude is fetching US$83.77. All things considered, this is a relatively minor reduction in the commodity's price. However, investors might be concerned about further price deterioration on the horizon.
Markets are dependent on supply and demand. In short, if supply increases prices go down — and if demand decreases prices go down. If we have both, then it's a double whammy to the downside.
According to Reuters, the United States is looking to up its supply by releasing more oil from its strategic reserves. Simultaneously, there are growing concerns that demand from China — the world's largest crude oil importer — could be in question.
Reportedly, China has indefinitely delayed the release of economic data for the People's Republic. This action has commodity analysts presuming demand could be weakened by the country's zero COVID-19 policy.
Still bullish on the Woodside share price
Allan Gray, a contrarian funds manager in Australia, shared their continued conviction in Woodside shares in its latest quarterly commentary.
According to the letter, the Allan Gray Australia Equity Fund maintains Woodside as its largest holding, at a 10% weighting. Although, the fund manager stated it has trimmed exposures in the energy sector to reallocate to other ideas.
The Woodside share price has been an exceptional performer in 2022, rising 43.8%.
