The oil price has taken a hit, but some ASX energy shares are moving higher on Monday.
During early afternoon trade, Woodside Energy Group Ltd (ASX: WDS) shares are up 1.15% to $28.19. That leaves the Woodside share price up around 20% in 2026.
Santos Ltd (ASX: STO) is also having a stronger session. Its shares are up 2.25% to $7.26, taking its gain for the year to around 17%.
Beach Energy Ltd (ASX: BPT) is climbing 1.49% to 85.3 cents, while Origin Energy Ltd (ASX: ORG) is moving the other way, down 0.77% to $10.28.
The move comes as investors look past weaker oil prices and focus on a more positive view from brokers.
Let's take a closer look.
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Oil prices have cooled quickly
The oil market has lost a lot of heat over the past month.
Based on Trading Economics, Brent crude is trading at around US$72 a barrel today, while West Texas Intermediate (WTI) is sitting near US$69 a barrel.
The pullback follows another move from OPEC+ to lift supply. The group has agreed to raise output by 188,000 barrels per day from August, extending its run of monthly increases.
At the same time, energy flows through the Strait of Hormuz are recovering. That has eased some of the supply worries that were pushing oil higher just a few weeks ago.
The market has gone from worrying about Middle East supply risks to focusing again on extra production and softer prices.
Brokers find value after the selloff
The weaker oil price has not stopped Morgan Stanley from turning more positive on parts of the ASX energy sector.
According to the broker update, analyst Rob Koh has upgraded Santos to 'overweight' and lifted the price target to $7.67, up from $7.50.
Woodside and Beach Energy were also upgraded to 'equal-weight' from 'underweight'.
Morgan Stanley pointed to better valuations, free cash flow yields, and a more favourable risk-reward setup across parts of the sector.
It also noted that the ASX 200 energy index has fallen around 15% over the past 2 months, while earnings estimates have been dragged down as much as 28%.
Origin misses out
Origin Energy did not get the same treatment.
Morgan Stanley cut its price target on Origin to $10.35, down from $11.00, and kept it as its least preferred pick in the group.
The broker is concerned that lower east coast domestic gas prices could flow through to weaker electricity prices and put pressure on earnings.
It also flagged the proposed 2027 domestic gas reservation policy as another uncertainty hanging over the sector.
Foolish takeaway
The upgrades should give Woodside, Santos, and Beach Energy some support after a rough stretch for oil.
However, I wouldn't read too much into it just yet.
This looks more like a valuation call after a tough couple of months for the sector.
Woodside and Santos have already climbed strongly in 2026, so investors are not exactly buying them at a big discount.
From here, the oil price needs to settle down. If crude keeps sliding, broker upgrades alone probably won't be enough to keep these ASX 200 energy shares moving higher.
