Why are ASX 200 energy shares taking such a beating today?

A fall in many energy commodity prices overnight has hit energy shares today.

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ASX 200 energy shares are down almost across the board today, with the S&P/ASX 200 Energy Index (ASX: XEJ) slumping 3.3% in morning trading.

It appears a poor commodities trading session overnight is to blame for the dramatic fall.

By comparison, the S&P/ASX 200 Index (ASX: XJO) is down by 1.3%.

Let's investigate.

ASX 200 energy shares lagging the market

Here is the state of play among the big ASX 200 energy shares at the moment:

  • Whitehaven Coal Ltd (ASX: WHC) shares are down 3.8%
  • The Santos Ltd (ASX: STO) share price is down 3.8%
  • The Woodside Energy Group Ltd (ASX: WDS) share price is down 3.5%
  • New Hope Corporation Ltd (ASX: NHC) shares are down 0.94%
  • The Ampol Ltd (ASX: ALD) share price is down 1.4%.

Overnight, a bunch of energy commodities fell, and this is likely behind today's fall in energy stocks.

UK gas prices fell 8.29% and TTF gas prices fell 6.03% overnight.

According to analysis on Trading Economics:

UK natural gas futures are exhibiting fluctuations above 100 pence per therm as winter approaches, mirroring the trends in the European benchmark.

Nonetheless, the market's upward momentum is being tempered by subdued demand in both the UK and Europe, in conjunction with heightened imports of liquefied natural gas (LNG).

The natural gas market is currently grappling with a sense of uncertainty due to tight global gas supplies and a range of risks, including US outages, extreme weather, disruptions in Russian gas exports, and extended outages in Norway. 

Also overnight, ethanol tumbled 5.65%, propane fell 3.23%, coal dropped 3.19%, and naphtha fell 2.94%.

The Australian Financial Review (AFR) reports that coal power generation in Australia has fallen to a new low as unseasonably warm weather forces coal plants to reduce production during the day to avoid losses.

Oil prices are also trading lower today.

West Texas Crude (WTI) oil has dropped below US$90 per barrel to $88.493 currently. Brent crude oil is also down and trading just above US$90 per barrel at the time of writing.

As my Fool colleague James reports, a strong US dollar and profit-taking are behind the oil price falls.

The US dollar strengthened as a result of the US Federal Reserve indicating interest rates may remain higher for longer.

Higher interest rates make oil storage and shipping more costly.

A higher US dollar makes oil more expensive to buy because the commodity is traded in the US currency.

The only energy commodity trading strongly overnight was uranium, up 6.87% to US$70 per pound.

However, major uranium stocks are also down today. The Paladin Energy Ltd (ASX: PDN) share price is down 4.4%, Boss Energy Ltd (ASX: BOE) is down 2.6%, and Deep Yellow Ltd (ASX: DYL) is down 3%.

ASX uranium shares have been going gangbusters lately as sentiment on nuclear energy changes worldwide.

Motley Fool contributor Bronwyn Allen has positions in Woodside Energy Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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