Woodside Energy Group Ltd (ASX: WDS) shares bucked the wider selling action on Thursday to close yesterday's session at $34.79 apiece.
Shares in the S&P/ASX 200 Index (ASX: XJO) oil and gas stock gained 1.13% on a day the benchmark index lost 0.26%.
Woodside shares also got a lift on Monday, closing up 0.8%, on the back of the OPEC+ meeting over the weekend.
After Saudi Arabia announced it will reduce its oil output by one million barrels per day in July, and potentially extend those cuts, crude oil prices marched higher. Brent crude gained 1.2% over the weekend to trade for US$77.07 per barrel on Monday.
None of the other OPEC+ members agreed to additional cuts. But they did agree to maintain their previously announced reductions through to the end of 2024.
While OPEC's production plans are certainly something to keep an eye on if you're holding or looking to buy Woodside shares, the cartel isn't the most important thing to watch.
60% of forecast oil demand growth from one country
Since Monday, oil has edged about 0.5% lower. A barrel of Brent crude is currently trading for under US$77 a barrel.
That's because, as Economics 101 dictates, there are two determinants to price.
OPEC+ might have succeeded in reducing the supply side. But if demand doesn't increase as markets had expected, crude oil prices will likely still fall. Which, in turn, would pressure Woodside shares.
Indeed, International Energy Agency (IEA) executive director Fatih Birol said China is the most important factor for the global oil market today.
According to Birol (courtesy of Bloomberg):
There are many uncertainties, as usual, when it comes to the oil market, and if I have to pick the most important one it's China. Of more than 2 million barrels a day of growth we expect this year in global oil demand, 60% is set to come from China.
If you're eyeing Woodside shares, be sure to keep one eye on what's happening in the Middle Kingdom too.
"If the Chinese economy weakens, or growth is much lower than many international economic institutions believe, of course this can lead to bearish sentiment," Birol said.
On the flip side, he added, should the Chinese economy steam ahead, OPEC's supply reductions will usher in a "tight oil market" in the second half of 2023.
How have Woodside shares been tracking?
Woodside shares have gained 0.14% over the past year.
When you throw in the $3.75 in dividends paid out over the 12 months, the ASX 200 energy stock's accumulated value has increased by around 11% in that time.
