Woodside Energy Group Ltd (ASX: WDS) shares have found themselves under heavy selling pressure amid the fast-falling oil price.
After sliding 4.8% yesterday to US$73.30 per barrel, oil edged lower again overnight, with that same barrel currently trading for US$72.91.
That sees the oil price down more than 20% since early April, when Brent crude was trading for US$91 per barrel.
As you'd expect, that's helped put Woodside shares under selling pressure. Indeed, shares in the S&P/ASX 200 Index (ASX: XJO) energy stock are down 34% over 12 months, having dropped 20% in 2024.
In early afternoon trade today, shares are down 6.3% to $25.14, with the stock coming under added selling pressure as Woodside trades ex-dividend today.
What's happening with the oil price?
Despite the ongoing potential for a major escalation in the Middle East conflict, the oil price has been trending lower amid unfavourable demand and supply dynamics.
On the demand side, the ongoing slowdown in China's economy and a potential slowdown in the United States could see lower energy demand from the world's top two economies.
Impacting the oil price, and by connection Woodside shares, on the supply side the US fracking industry continues to produce near record amounts of oil.
This comes as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are meant to begin gradually rolling back their production cuts in October, commencing by adding 180,000 barrels per day of output next month.
And then there's the half a million barrels a day of oil that Libya is now widely expected to return to the market following negotiations between the country's rival governments.
However, the oil price could yet get a boost as OPEC+ is now reportedly considering delaying its planned production increase.
According to Frank Monkam, senior portfolio manager at Antimo (quoted by Bloomberg):
Headlines of OPEC potentially reneging on supply release brought some respite to markets in the early hours of trading, but momentum from the systematic and macro community appears quite strong at the moment until the dust settles.
Are Woodside shares now trading for a bargain?
Whether Woodside shares are set for a strong rebound or have further to fall yet depends on who you ask.
Personally, I believe global oil and gas prices are likely near their lows.
And while I hope for a lasting peace deal in the Middle East, the potential of a direct conflict between Iran and Israel can't be ruled out. This dire scenario presents a serious upside risk for the oil price.
I'm also attracted to Woodside's dividends. At the current share price, the ASX 200 energy stock trades on a fully franked trailing dividend yield of 7.7%.
Morgans also has a bullish outlook for Woodside. The broker has an add rating on the stock with a $33.00 price target. That's some 31% higher than current levels.
If you were to ask the analysts at Citi, they'd lean the other direction (courtesy of The Australian).
The broker downgraded the stock to sell. Its analysts lowered their target price for Woodside shares to $24.50 apiece, citing concerns about falling dividends and the potential for further costly acquisitions ahead.
