It has been a tough day for Woodside Energy Group Ltd (ASX: WDS) and its fellow ASX energy shares.
Investors have been selling off their shares today after oil prices sank during overnight trade.
Here's the state of play at the time of writing:
- The Beach Energy Ltd (ASX: BPT) share price is down 2% to $1.48.
- The Karoon Energy Ltd (ASX: KAR) share price is down almost 3% to $2.48.
- The Santos Ltd (ASX: STO) share price is down 2% to $7.30.
- The Woodside share price is down 2.5% to $33.74.
Why are ASX energy shares falling?
The weakness today has been driven by a sharp pullback in oil prices caused by weak gasoline demand in the United States.
According to Reuters, the WTI crude oil price was down 5.6% to US$84.22 a barrel and the Brent crude oil price dropped 5.6% to US$85.81 a barrel.
The media outlet reports that finished motor gasoline supplied, which is used as a proxy for demand, fell last week to approximately 8 million bpd. This is its lowest level since the start of this year according to the U.S. Energy Information Administration (EIA).
JP Morgan also notes that on a seasonal basis, US gasoline consumption is at its lowest level in over two decades. This has been blamed on a huge spike in fuel prices over the last few months which has put pressure on demand.
This has ultimately led to gasoline inventories rising by 6.5 million barrels, which far exceeds the market's expectations for a 200,000-barrel rise.
Should you buy the dip?
The team at Morgan Stanley is likely to see this pullback as a buying opportunity for a couple of these ASX energy shares.
Its analysts currently have an overweight rating and $40.00 on Woodside's shares and an overweight and $8.88 price target on Santos' shares.
This implies a potential upside of approximately 19% and 22%, respectively, for investors over the next 12 months.
