Woodside Energy Group Ltd (ASX: WDS) shares hit fresh 52-week lows on Monday, falling as low as $23.62 in mid-afternoon trading. At the time of writing, Woodside shares have nudged higher to $23.83 per share.
The stock's last yearly low was $24.93 apiece on 8 August, and shares are now down 24% this year.
This downtrend is a part of a broader decline in oil prices this year. Concerns over weak demand and an oversupplied market are weighing heavily on energy stocks like Woodside.
Let's take a closer look.
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Oil prices slump, dragging Woodside shares down
The global benchmark for oil, the Brent crude oil price, has continued its downward spiral in recent weeks.
Brent currently trades at US$71.88 a barrel, its lowest level since 2021.
According to Trading Economics, fears of a slowdown in the United States and soft economic growth in both China and Europe have been major factors in the slump.
Meanwhile, the US oil industry continues to produce near-record levels of oil, adding to global supply.
In response to this macroeconomic backdrop, Morgan Stanley has cut its oil price forecasts.
The broker now expects Brent crude to average US$75 per barrel in the fourth quarter of 2024, according to the Australian Financial Review.
This is down from an earlier forecast of US$80 per barrel.
Similarly, Citigroup has warned of a potential oversupply. It estimates prices could drop as low as US$60 per barrel by 2025 unless production cuts are started.
This sharp fall in oil prices has hit Woodside shares hard, with the stock down nearly 5% in the past month.
Analysts divided
Analysts are split on the outlook for Woodside shares. Morgans has a buy rating on the stock with a price target of $33 per share.
According to my colleague James, Morgans reckons the company's healthy balance sheet and strong dividend profile make it an attractive investment, especially at these lower levels.
Based on current prices, Morgans is forecasting fully franked dividend yields of around 8% for FY2024.
However, not all analysts are as bullish. Citi recently downgraded Woodside to a sell rating, slashing its price target to $24.50 per share.
Citi analysts are concerned about falling dividends and the potential for further costly acquisitions, warning that Woodside's downgrades might not be over yet.
Foolish takeaway
Woodside shares are trading at new 52-week lows as the oil market faces continued pressure from weak demand and ample supply.
While some analysts see this as a buying opportunity, others remain cautious.
The Woodside share price is down 37% in the past year.
