The Woodside Energy Group Ltd (ASX: WDS) share price is in the red today.
Shares in the S&P/ASX 200 Index (ASX: XJO) oil and gas stock closed yesterday trading for $27.14. In afternoon trade on Tuesday, shares are swapping hands for $26.80 apiece, down 1.3%.
That sees Woodside trailing the ASX 200, with the benchmark index down 0.6% at this same time.
In a better comparison of apples to apples, the S&P/ASX 200 Energy Index (ASX: XEJ) is also under heavier pressure, down 1.2%.
As for Woodside's chief rivals, the Santos Ltd (ASX: STO) share price is down 1.0% while shares in Beach Energy Ltd (ASX: BPT) are down 1.6%.
With today's intraday losses factored in, the Woodside share price is now down a painful 30% over 12 months, not including the two dividend payouts. In fact, you'd have to go back more than two years, to February 2022, to find the stock trading for a lower price.
So, what's going on?
Woodside share price hit by energy concerns
The Woodside share price, along with shares in Santos and Beach Energy, is under pressure after Brent crude oil slipped below the key psychological level of US$80 per barrel.
The oil price declined by 0.5% overnight to US$79.42 per barrel. That now sees Brent crude oil down more than 9% since 5 July, when that same barrel was fetching US$87.43.
There look to be a number of headwinds keeping a lid on global oil prices.
First, costs could be coming down by 10% this year for the mammoth United States fracking industry. That's according to a new report from energy data and analytics firm Wood Mackenzie.
According to Wood Mackenzie's Nathan Nemeth (courtesy of Bloomberg):
Both E&Ps [exploration & production] and service providers are emphasizing significant efficiency improvements, albeit for different reasons. If E&Ps look to reduce costs more, it must come from additional efficiency improvements, as OFS [oilfield equipment and services] pricing is unlikely to fall.
The oil price and the Woodside share price are also not getting any help from China.
With the Chinese economy continuing to struggle to regain solid growth traction, oil demand has been slipping, with fuel imports into the Middle Kingdom falling 11% in H1 2024.
"The economic problems in China are also sucking the juice out of the oil market," said Bob Yawger, director of energy futures at Mizuho (quoted by Reuters).
Then there's the potential escalation of conflict between Israel and Lebanon-based Hezbollah in the oil-rich Middle East, where Israel has vowed to retaliate for a rocket attack that killed a dozen children.
Fortunately, it currently looks like that retaliation may be limited and a full-scale war avoided.
"It seems like the market has come around to the idea that, even as horrific as these episodes are, they are not likely to cause a region-wide conflict," John Kilduff, partner at Again Capital said.
The oil price and the Woodside share price continue to get some support from the supply cutbacks initiated by the Organization of the Petroleum Exporting Countries and its allies (OPEC+).
The cartel had flagged a gradual return to output increases commencing in Q4, but market watchers are now more doubtful this will eventuate.
OPEC+ has a review session on its production plans this Thursday.
