ASX 200 energy shares have soared in the year to date, but what's the outlook for oil prices?
Oil producers on the ASX 200 include Santos Ltd (ASX: STO), Woodside Energy Group Ltd (ASX: WDS) and Beach Energy Ltd (ASX: BPT).
All three ASX 200 energy shares have enjoyed tailwinds this year to date amid soaring gas and oil prices. Let's take a look at what could lie ahead.
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'Turning point' for oil
Woodside shares have exploded a massive 76% in the year to date. Meanwhile, Beach Energy shares have soared nearly 40% year to date, while Santos shares have climbed nearly 19%.
Looking at the outlook for the oil price, a decision by OPEC to cut production could benefit oil prices, according to analysts.
In a research note, ANZ senior commodity strategist Daniel Hynes and commodity strategist Soni Kumari said:
OPEC's move to cut production by 2 million b/d could be a turning point for the oil market and it is starting from this month.
This, along with Russian oil sanctions by the EU from December, could tighten the market in Q4.
Possible headwinds?
On the flip side, the strategists noted the impact of the slowing global economy and Chinese demand on the oil price and pointed out that the oil market was strong. They said:
A slowing global economy and sustained soft demand from China are key headwinds, but the oil market is fundamentally in a stronger position that it has been in previous economic downturns due to depleted stocks for oil and refined products.
Underinvestment in the sector remains a structural factor that is supporting prices.
Woodside reported in its recent quarterly results it achieved a portfolio average realised price of $102 per barrel of oil equivalent in the third quarter. Santos said it achieved a crude oil price of US$108 a barrel.
