The Woodside Energy Group Ltd (ASX: WDS) share price is taking a tumble today.
Shares in the S&P/ASX 200 Index (ASX: XJO) oil and gas stock closed yesterday trading for $27.93. In afternoon trade on Tuesday, shares are swapping hands for $27.46 apiece, down 1.7%.
That sees the Aussie energy giant significantly underperforming the ASX 200 today, with the benchmark index down 0.1% at this same time.
Here's what's happening.
Woodside share price catching OPEC headwinds
The Woodside share price is under pressure today following a sizeable retrace in global oil prices.
International benchmark Brent crude slipped 0.8% overnight to trade for US$77.82 per barrel. Only one week ago, on 28 May, that same barrel was trading for US$84.22, equating to a 7.6% weekly decline.
It's a similar story with West Texas Intermediate crude oil. At US$73.69 per barrel, WTI is down 0.7% overnight and down 7.7% over the week.
While the sinking oil price will come as good news to motorists filling their tanks, it's weighing on the Woodside share price today.
And shareholders look to have the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to thank.
As you're likely aware, OEPC+ members have been limiting their monthly outputs to help prevent a supply glut from sending the oil price crashing.
At the cartel's meeting over the weekend, members agreed to extend their existing cuts through the upcoming quarter. But OPEC surprised most analysts by announcing its intent to begin returning some of that missing production commencing in October.
Production cuts are then expected to be entirely phased out a year later.
Commenting on OPEC's decision sending the oil price and the Woodside share price lower, Taylor Nugent, a senior economist at National Australia Bank Ltd (ASX: NAB) said (quoted by The Australian Financial Review), "Most commodity analysts had expected the production cuts to be maintained till the end of the year."
Ryan McKay, a commodity strategist at TD Securities added (quoted by Bloomberg):
The market is coming to terms with the wind-down of the voluntary cuts starting in October. The easing of supply risk premia has already been weighing on prices and spreads, and the OPEC agreement has done little to turn that tide.
With today's intraday losses factored in, the Woodside share price is now down just over 21% in 12 months.
Which might well present a bargain over the medium to longer term.
As Christopher Watt, an investment advisor at Bell Potter Securities noted last week, "The recent share price pullback in this energy giant presents an attractive entry point for investors, in our view."
