The Woodside Energy Group Ltd (ASX: WDS) share price is up 0.66% today.
Shares in the S&P/ASX 200 Index (ASX: XJO) oil and gas stock closed yesterday trading for $32.63. Shares are currently changing hands for $32.845 each.
That's quite a strong performance from the Woodside share price today after crude oil prices fell again overnight, marking the third consecutive day of losses.
The drop in WTI and Brent Crude oil prices sent both crude benchmarks down to their lowest levels in more than a year.
Brent crude fell to US$71.64 per barrel overnight, down 10% from the US$79.31 per barrel it was trading for on Monday.
Though even as I pen this, crude looks to be rebounding.
Brent is currently trading for US$73.29, which would explain the support for the Woodside share price today.
Why is the oil price under pressure?
Less than a month ago, on 12 April, Brent crude was trading for US$87.33 per barrel. At that time, the Woodside share price stood at $34.52.
The oil price has come under pressure since then amid growing concerns about a potential global recession, which would see reduced energy demand from consumers and businesses.
Nor has the big boost in energy demand expected from China's reopening panned out in line with bullish expectations.
On the supply side, the recently announced supply cuts from OPEC+ have so far failed to boost oil prices. That's in part due to Russia, whose oil exports remain elevated despite global sanctions and the nation's pledge to its OPEC partners to cut output.
And in the world's biggest economy, the US Energy Information Administration reported an increase in fuel supplies and lower petrol demand.
"The most notable thing is that gasoline demand gave back all of the increases that we'd seen in previous weeks," president of Lipow Oil Associates Andrew Lipow said (as quoted by Reuters).
As if that wasn't enough to pressure the oil price, the US Fed increased interest rates yet again yesterday, raising concerns of an economic downturn and diminished demand.
Yet, while that sees the ASX 200 in the red today (down 0.17% at the time of writing), the Woodside share price remains resilient.
What's next for oil and the Woodside share price?
As the world's most watched central bank, the Fed has a lot of influence on future oil prices.
One of the positive notes that emerged yesterday was that the Fed omitted its previous language saying it anticipated further interest rate hikes ahead. Instead, the Fed now said it "will closely monitor incoming information and assess the implications for monetary policy".
That could see the oil price move higher, according to Price Futures Group analyst Phil Flynn. This would offer further tailwinds for the Woodside share price.
"The Fed going into a pause mode should be very supportive for the price of oil," Flynn said.
And while Morgan Stanley lowered its forecast for Brent prices to US$75 a barrel by the end of 2023, that's still above current levels.
According to Morgan Stanley (courtesy of Reuters):
Downside risk to Russia's supply and upside risk to China's demand have largely played out and prospects for 2H tightness have weakened.
