Why is the Woodside share price storming higher on Wednesday?

The Woodside Energy Group Ltd (ASX: WDS) share price has gone up 2% as shareholders benefit from the rise in the oil price.

The oil and gas giant may be benefiting from improved investor sentiment due to the higher oil price overnight.

Brent crude for January rose by 2% to US$94.65 according to reporting by Reuters.

Why is the oil price rising?

There are often daily gyrations when it comes to commodity prices, with not all of them explainable.

However, the recent lift could be because China – a huge user of oil – could reopen from COVID-19 lockdowns according to reporting by Reuters. The media outlet reported:

An unverified note trending in social media, and tweeted by influential economist Hao Hong, said a “Reopening Committee” has been formed by Politburo Standing Member Wang Huning, and was reviewing overseas COVID data to assess various reopening scenarios, aiming to relax COVID rules in March, 2023. Hong Kong and China stocks jumped on the rumours.

Another possible helpful point for the oil price was that OPEC – a group of oil-producing countries – increased its forecast for world oil demand in the medium to long term on Monday.

Can the Woodside share price rise further?

It depends on who you ask after seeing the latest quarterly update.

The broker Macquarie currently has a neutral rating on Woodside, with a price target of $33.10. That implies that the ASX oil and gas giant could fall by more than 10% over the next week. Macquarie thinks that it can benefit from the LNG market with high demand, and supply not quite keeping up.

But Credit Suisse is a bit more optimistic about Woodside’s prospects. The broker has an outperform rating, with a price target of $39.55, implying a possible rise of around 5%. It thinks it could benefit from LNG prices.

Morgans puts it as a hold, with a price target of $36.90, implying a slight drop.

Despite the range of expectations for how the Woodside share price is going to go, all brokers are expecting a sizeable dividend yield from the business. For example, Macquarie thinks that Woodside could pay a grossed-up dividend yield of 11.3% in FY23.

The post Why is the Woodside share price storming higher on Wednesday? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Why did Santos and Woodside shares outperform the ASX 200 today
• These ASX 200 energy shares are leading the market higher on Tuesday
• Are Woodside shares the ‘most loved’ among the ASX energy giants?
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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