Woodside Energy Group Ltd (ASX: WDS) shares are in the green today.
The S&P/ASX 200 Index (ASX: XJO) oil and gas stock closed yesterday trading for $37.88 a share. In morning trade on Friday, shares are swapping hands for $38.32, up 1.2%.
For some context, the ASX 200 is up 1.6% at this same time.
Here's why investors are bidding up Woodside shares today.
Why is the ASX 200 energy stock soaring on Friday?
Like many of its ASX 200 energy competitors, the Woodside share price is getting some welcome tailwinds from a soaring oil price.
International benchmark Brent crude oil gained again overnight to be trading for US$94.14 per barrel. That's the highest price yet in 2023. And it puts the oil price up a remarkable 30% in less than three months.
On 27 June, a barrel of Brent crude was worth US$72.26. Woodside shares have gained 13% since then.
The oil price is fast approaching US$100 per barrel again, fuelled by both unexpectedly resilient demand alongside sustained production cuts.
On the demand front, the International Energy Agency noted in its September Oil Market Report, "World oil demand remains on track to grow by 2.2 mb/d in 2023 to 101.8 mb/d, led by resurgent Chinese consumption, jet fuel and petrochemical feedstocks."
As for the slide in production, that's largely being driven by renewed pledges from Saudi Arabia and Russia to extend their existing cuts.
According to the IEA, "The extension of output cuts by Saudi Arabia and Russia through year-end will lock in a substantial market deficit through 4Q23."
While the total OPEC+ output has fallen by 2 million barrels per day so far in 2023, the IEA reported:
Non-OPEC+ supply rose by 1.9 mb/d to a record 50.5 mb/d by August. World supply in 2023 will rise by 1.5 mb/d, with the US, Iran and Brazil top sources of growth.
The oil price, and by extension Woodside shares, are also getting a push higher from a surprisingly large fall in inventories.
"Global observed oil inventories plummeted by 76.3 mb to a 13-month low in August," the IEA reported.
What else is happening with Woodside shares?
In a potential looming headwind for Woodside shares, Federal Court Judge Craig Colvin ruled yesterday that the company's planned seismic testing at its offshore Scarborough project – intended to commence last week – would be blocked until 28 September.
Woodside's seismic testing, intended to scope out gas deposits at the project, was approved by the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) in July.
However, the approval was challenged in court by the Environmental Defenders Office (EDO). The EDO is acting on behalf of Indigenous woman, Raelene Cooper. Cooper claims the ASX 200 energy giant failed to suitably consult her and other traditional owners before the NOPSEMA approval.
Following the decision Cooper said (quoted by the EDO):
Woodside have not conducted proper consultation with traditional custodians about the impacts of their seismic blasting on our culture.
The risks and the impacts of Woodside's seismic blasting and the consequences of these actions will be life threatening for many species of water life, especially the whales. These majestic and graceful marine mammals carry our songlines from one part of Country to another, they are documented on our munda (rocks), and they are our dreaming stories that I hold.
EDO Special Counsel Clare Lakewood said, "We look forward to returning to court in a few weeks to present our case as to why the approval NOPSEMA gave to Woodside was not legally valid."
As you'd expect, Woodside did not share this view.
Woodside's lawyer Steven Penglis said the delays were very costly, with survey vessels standing by at Scarborough but unable to proceed.
"If you look at the rates and prices for that survey vessel on stand-by, 24 hours a day … it's a large number," he said (quoted by The Brisbane Times). "That is the major fiscal consequence of the injunction."
Penglis added, "Woodside is still consulting, and it is happy to do so as quickly as possible and in a culturally sensitive way."
If the company gets the go ahead on 28 September for the seismic testing, Woodside shares could get another leg up. If the judge finds in favour of the EDO case, shares could face some pressure.
