The Santos share price is under pressure today. Here’s why

The Santos Ltd (ASX: STO) share price is down 1.2% in early afternoon trade.

Santos shares closed yesterday trading at $7.81 and are currently swapping hands for $7.72 apiece.

So, why is the S&P/ASX 200 Index (ASX: XJO) energy share under pressure?

What are ASX investors considering today?

The broader market is enjoying a welcome rebound today following a strong performance in US markets overnight, with the ASX 200 up 0.7% at time of writing.

But the energy sector is struggling, as witnessed by the 4.0% plunge in the S&P/ASX 200 Energy Index (ASX: XEJ).

This comes as crude oil prices retreated again overnight, pressuring the Santos share price.

West Texas Intermediate (WTI) crude is currently trading for US$82.74 per barrel. That’s down from US$87.39 on Wednesday and down from US$97.01 per barrel as recently as 29 August. WTI is now trading at its lowest levels since mid-January, a month before Russia’s invasion of Ukraine.

International benchmark Brent crude has suffered similar falls. Brent crude is currently trading for US$88.71 per barrel, down from $93.39 on Wednesday. On 29 August, a barrel of Brent crude was fetching US$105.09.

Oil prices, and by connection, the Santos share price, are sliding as investors eye a possible recession in the United States, Europe and other top economies, which would diminish demand for fuel.

There are also concerns that China’s COVID-zero policies, which are seeing major population centres locked down, will crimp China’s growth outlook and oil demand.

Crude prices have slipped despite Monday’s announcement by OPEC+ to reduce the cartel’s output.

Santos share price snapshot

Despite today’s slide, the Santos share price remains up a healthy 16% in 2022. That compares to a year-to-date loss of 11% posted by the ASX 200.

Santos also pays a 2.9% trailing dividend yield, unfranked.

The company was a clear winner of soaring oil and gas prices in the first half of the year, reporting an 85% year-on-year leap in revenue.

The post The Santos share price is under pressure today. Here’s why appeared first on The Motley Fool Australia.

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More reading

• Why has the oil price been so volatile lately?
• 5 things to watch on the ASX 200 on Thursday
• Why is the Santos share price slipping on Wednesday?
• ‘We would like to see faster progress’: ASX 200 energy shares on notice
• How are ASX 200 energy stocks performing on Tuesday?

Motley Fool contributor Bernd Struben 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.

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