Down 12% in a week, has the Woodside share price got further to fall?

Worker inspecting oil and gas pipeline.

Worker inspecting oil and gas pipeline.

The Woodside Energy Group Ltd (ASX: WDS) share price has been through plenty of pain in the past week, it has dropped around 12%. But, can the gas and oil ASX share turn things around?

Over the past year, the business has been through a lot. It has benefited from the higher energy prices amid the Russian invasion of Ukraine.

It’s down more than 3% today. Despite all of the elevated profit generation, it’s now only 3% higher than it was 12 months ago.

What’s going on, and will the Woodside share price be able to recover?

Uncertainty rattles markets

The ongoing volatility in the US after the collapse of the bank Silicon Valley Bank (SVB) has caused some uncertainty.

The Australian Financial Review reported on a decline in the oil price yesterday. The Brent crude oil price declined US$2, or 2.4% to US$80.77. This decline was attributed to fears of a new financial crisis, though a “recovery in Chinese demand provided support.”

The newspaper reported that “worries about further Federal Reserve monetary tightening have been exacerbated by high US crude oil inventories.”

The relationship between supply and demand can have a noticeable impact on a resource price. It was noted by the AFR that “crude oil production in the seven biggest US shale basis is expected to rise in April to its highest since December 2019″, according to the Energy Information Administration.

What to make of this for the Woodside share price?

Clearly, investors don’t think it’s a positive. If Woodside’s production volume and production costs don’t change, then a reduction of the revenue per barrel of oil equivalent will largely be a cut to net profit after tax (NPAT) as well.

An investing opportunity can be opened up if a business keeps getting cheaper. But, it’s a bit trickier when it comes to resource shares, particularly when it comes to oil, gas and coal ASX shares. We don’t know what resource prices are going to do next.

Last week, JP Morgan cut its price target on Woodside shares to $34, according to reporting by The Australian. A price target implies where the share price could be in 12 months. At the time of the price target, that implied a decline. But, now it would suggest a small rise in the low-single-digits.

In the short term, movements of energy prices could dictate which way the Woodside share price goes from here.

The post Down 12% in a week, has the Woodside share price got further to fall? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the ‘five best ASX stocks’ for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now…

See The 5 Stocks
*Returns as of March 1 2023

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];[property] = defaultValue;

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);

More reading

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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s