The Woodside Energy Group Ltd (ASX: WDS) share price has been on a strong run in 2022 to date. In fact, it has gone up by around 70%.
However, there has been a diverging performance compared to the oil price. Woodside shares have continued to go up while the oil price has faltered, as can be seen on the below chart.
It's common for share prices of resource businesses to track the movement of the underlying commodity, at least in the short term.
That's because the ASX share, Woodside in this case, makes its revenue and profit by selling resources to customers.
It costs roughly the same for the business to produce its commodity whether the resource price is US$10 higher or US$10 lower. But that extra revenue falls straight onto the bottom line.
However, it might be logical to think that a falling oil price would result in a lower Woodside share price. Yet that hasn't happened.
It was noted by Bespoke Invest that the last time crude oil was down 25% from a 52-week high and the energy sector was within 3% of a 52-week high was back in 2006.
The below chart also shows how there was a divergence for the Woodside share price back then.
What next for the Woodside share price?
No one knows what share prices are going to do tomorrow, next week, or next month. However, it may be worth pointing out a couple of things.
First, between mid-April 2006 and early 2007, the Woodside share price dropped around 20%. Of course, past movements of the Woodside share price – from over a decade ago – may not mean much in 2022.
It's also worth noting that Woodside is a fairly different business now. There are different geopolitical factors at work, it's now heavily involved with LNG, and the company's work on planned projects is different as well.
There are some brokers that have had their say on which direction the shares may go from here.
Macquarie is neutral on the business, though its price target is $33.10, implying a drop of more than 10%.
UBS is also neutral on the Woodside share price, with a price target of $34.40. That implies a possible drop of around 10%.
It seems that some analysts think that the oil and gas ASX share has risen too much, though they're not expecting a reverse of a lot of the gains seen this year.
Woodside share price snapshot
Over the last month, Woodside has risen by more than 8%.
