Energy majors weigh on ASX as oil prices fall to four-month low
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More news: Energy was the worst performing sector on the ASX by afternoon trading as oil prices extended losses, after the Organization of the Petroleum Exporting Countries and allies (OPEC+) indicated it would phase out voluntary output cuts from October.
In the local market, the energy sector lost 1.4% as the wider market lowered 0.14%. Karoon Energy (-3.6%), Beach Energy (-2.5%), Viva Energy (-2%), Woodside Energy (-1.8%), Santos (-1.8%), Ampol (-0.4%) were all down.
Brent crude was down 0.75% to US$77.77 ($116.37) a barrel by 2:30pm AEST having dropped 3.4% on Monday. West Texas Intermediate lost 0.88% to US$73.57.
Oil prices fall to four-month low amid demand worries
The news: Oil prices tumbled to their lowest in nearly four months, as investors worried that a complicated OPEC+ output decision could lead to higher supplies later in the year even though demand growth has been slow.
The numbers: Brent crude futures fell 3.4% to USD78.36 a barrel, closing below USD80 for the first time since 7 February. US West Texas Intermediate (WTI) crude futures also closed at a near four-month low of USD74.22 a barrel, down 3.6%.
The context: The decline came after the Organization of the Petroleum Exporting Countries and allies led by Russia, together known as OPEC+, agreed to extend most of its production cuts into 2025 but left room for voluntary cuts from eight members to be gradually unwound from October onward.
Analysts at Goldman Sachs said the outcome was negative for oil prices as the phasing out of voluntary cuts shows a strong desire by several OPEC+ members to bring back output despite recent increases in global oil stocks.
It comes amid high interest rates and rising output from non-OPEC producers like the US that is weakening demand and has weighed on prices in recent months.
The source: Reuters
