Why is the Woodside share price tumbling on Tuesday?

ASX 200 investors are bidding down the Woodside share price today. But why?

| More on:
Oil worker using a smartphone in front of an oil rig.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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."

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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.

More on Energy Shares

A miner stands in front oh an excavator at a mine site
Opinions

3 reasons ASX uranium stocks can keep charging higher into 2025

I think the recent sell-down in ASX uranium stocks has been overdone. Here’s why.

Read more »

light bulb surrounded by green hydrogen and renewable energy icons
Energy Shares

What's put the wind up AGL shares on Friday?

AGL has outlined where it expects to invest for the energy transition.

Read more »

Emotional euphoric young woman giving high five to male partner, celebrating family achievement, getting bank loan approval, or financial or investing success.
Energy Shares

Why is ASX 200 uranium stock Boss Energy flying higher on Friday?

ASX 200 investors are snapping up Boss Energy shares today. But why?

Read more »

Three coal miners smiling while underground
Dividend Investing

Is the 11% dividend yield from Yancoal shares too good to be true?

Can you ever rely on an 11% dividend yield?

Read more »

sad looking petroleum worker standing next to oil drill
Energy Shares

Woodside shares hit a multi-year low this week, should you buy?

Is this oil and gas giant an unloved opportunity?

Read more »

A worker with a clipboard stands in front of a nuclear energy facility
Energy Shares

AGL share price slides amid $450 million tech cash splash

ASX 200 investors are bidding down the AGL share price today.

Read more »

An oil worker in front of a pumpjack using a tablet PC.
Energy Shares

Why is the Woodside share price racing ahead of the benchmark today?

Woodside shares look to be catching tailwinds from two fronts today.

Read more »

Oil worker using a smartphone in front of an oil rig.
Energy Shares

Should you load up on Woodside shares?

Let's see what analysts are saying about the energy giant.

Read more »