The Woodside Energy Group Ltd (ASX: WDS) share price has been through plenty of pain in the past week, it has dropped around 12%. But, can the gas and oil ASX share turn things around?
Over the past year, the business has been through a lot. It has benefited from the higher energy prices amid the Russian invasion of Ukraine.
It's down more than 3% today. Despite all of the elevated profit generation, it's now only 3% higher than it was 12 months ago.
What's going on, and will the Woodside share price be able to recover?
Uncertainty rattles markets
The ongoing volatility in the US after the collapse of the bank Silicon Valley Bank (SVB) has caused some uncertainty.
The Australian Financial Review reported on a decline in the oil price yesterday. The Brent crude oil price declined US$2, or 2.4% to US$80.77. This decline was attributed to fears of a new financial crisis, though a "recovery in Chinese demand provided support."
The newspaper reported that "worries about further Federal Reserve monetary tightening have been exacerbated by high US crude oil inventories."
The relationship between supply and demand can have a noticeable impact on a resource price. It was noted by the AFR that "crude oil production in the seven biggest US shale basis is expected to rise in April to its highest since December 2019", according to the Energy Information Administration.
What to make of this for the Woodside share price?
Clearly, investors don't think it's a positive. If Woodside's production volume and production costs don't change, then a reduction of the revenue per barrel of oil equivalent will largely be a cut to net profit after tax (NPAT) as well.
An investing opportunity can be opened up if a business keeps getting cheaper. But, it's a bit trickier when it comes to resource shares, particularly when it comes to oil, gas and coal ASX shares. We don't know what resource prices are going to do next.
Last week, JP Morgan cut its price target on Woodside shares to $34, according to reporting by The Australian. A price target implies where the share price could be in 12 months. At the time of the price target, that implied a decline. But, now it would suggest a small rise in the low-single-digits.
In the short term, movements of energy prices could dictate which way the Woodside share price goes from here.
