Oil Price Plunge Sends Woodside Energy's Shares Tumbling

Woodside Energy Group Ltd (ASX: WDS) finds itself amid a tumultuous week as its shares experience a downward trajectory. As of the latest update, Woodside Energy's shares have witnessed a 3% decline, resting at $31.17 in the morning trade.

Worth mentioning here is that it fellows, Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) also faced a downward trend.

The prevalent decline in Woodside Energy's shares resonates across the ASX 200 energy sector. Beach Energy Ltd and Santos Ltd, key players in this segment, are also grappling with over 1% dips in their shares.

Reasons Behind Woodside Energy's Share Decline

• Impact of Oil Price Fluctuations

Investors’ decisions to offload ASX 200 energy shares stem from a substantial drop in oil prices witnessed overnight. The WTI crude oil price plummeted 4.9% to AU$72.90 a barrel, while the Brent crude oil price declined 4.6% to AU$77.42 a barrel, marking their lowest levels since early July.

• Concerns Over Supply and Demand Dynamics

The primary catalyst driving the oil price slump revolves around apprehensions concerning supply growth and the global demand forecast. Reports from the Energy Information Agency accentuate a surge in U.S. crude inventories by 3.6 million barrels last week, coinciding with constant production at a record 13.2 million barrels per day.

Factors Contributing to the Oil Price Decline

• US Crude Inventories and Production Rates

The substantial rise in crude inventories coupled with stagnant production levels exacerbates concerns about supply surpassing demand. Further exacerbating this worry is a 0.6% decline in US industrial production, a significant consumer of oil.

• Impact of Chinese Crude Refining Slowdown

Additionally, news of a 2.8% deceleration in Chinese crude refining in October, after a record high in September, indicates a slowdown in the world's second-largest economy's oil demand.

Expert Insights and Analysis

Jim Burkhard from S&P Global Commodity Insights elucidates the current scenario, attributing it to the fading impact of China's COVID reopening and the unprecedented oil production in the U.S. Burkhard highlights the interplay between non-OPEC+ supply growth and a seasonal downturn in demand, resulting in the prevailing market situation.

Conclusion

The current downtrend in Woodside Energy’s shares and the broader ASX 200 energy segment is predominantly propelled by oil price plunges amid concerns regarding supply outpacing demand. While experts like Jim Burkhard foresee market corrections, OPEC anticipates a shift in dynamics and remains hopeful about future production plans.