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The performance of ASX energy shares in 2023 has been marked by significant swings amid volatile energy prices, particularly in the context of Brent crude oil. While the S&P/ASX Energy Index (XEJ) is down 5.4% for the year, the broader ASX has gained 4.2%.
Key ASX Energy Stocks:
Focusing on major Australian oil and gas stocks – Woodside Energy Group Ltd (WDS), Santos Ltd (ASX:STO), and Beach Energy Ltd (BPT) – reveals varied performances in 2023:
- Woodside shares are down 4%
- Santos shares are up 3%
- Beach Energy shares are down 5%
Consideration of dividends further shapes the investment landscape, with Woodside offering an 11.2% fully franked dividend yield, Santos at a 4.9% unfranked yield, and Beach Energy presenting a 2.7% fully franked yield.
Factors Influencing 2024 Performance:
Several factors will influence the performance of ASX energy shares in 2024:
- Regulatory Approvals: The receipt of final regulatory approvals for multi-billion-dollar energy projects will play a crucial role.
- Merger Possibility: For Woodside and Santos, the potential merger into a single entity or the continuation as separate entities will impact their trajectories.
- Oil and Gas Prices: The primary determinant will be the prices these companies receive for the oil and gas they produce. Global oil demand is projected to reach 102.9 million barrels per day in 2024, with supply growth exceeding expectations.
Oil Price Outlook:
Analysts, including Goldman Sachs, forecast significant upside potential for the oil price in 2024, projecting Brent crude to trade in a range of US$70 to US$100 per barrel. OPEC+ has agreed to extend and increase existing supply cuts into Q1 2024, and further decisions on output cuts may influence prices.
Conclusion:
While global oil demand is expected to reach record highs, the interplay of supply dynamics and OPEC+ decisions will be crucial. Analysts suggest the potential for oil prices to rally if they move towards the US$100 per barrel range in 2024, signaling a positive outlook for ASX energy shares.