Energy stocks tumble as oil prices reach 14-month low
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More news: Energy was the worst performing sector in morning trade on the ASX, after oil prices reached 14-month lows due to concerns about demand in the US and China, and a likely rise in supplies out of Libya.
The energy sector was down 1.2% by 11:50am AEST, as the ASX 200 gained 0.31%.
Oil and gas majors Karoon Energy (-2.3%), Beach Energy (-2%), Woodside Energy (-1.4%), Santos (-0.8%) and Ampol (-0.5%) were all trading lower.
Woodside also announced that it had conducted a bond offer priced at US$2 billion ($2.97 billion) in the US market to be used "for general corporate purposes".
Oil prices reach 14-month low on demand concerns
The news: Oil prices held at a 14-month low as concerns about demand in the US and China, and a likely rise in supplies out of Libya, offset a higher-than-expected withdrawal from US inventories and a delay to output increases by OPEC+ countries.
The numbers: Brent futures closed 1 US cent lower to settle at USD72.69 ($107.86) a barrel on Thursday, while US West Texas Intermediate (WTI) crude fell 5 US cents, or 0.1%, to settle at USD69.15.
That was the lowest close for Brent since June 2023 for a second day in a row and the lowest close for WTI since December 2023 for a third day in a row, according to Reuters.
The context: The US Energy Information Administration said energy firms pulled 6.9 million barrels of crude out of storage during the week ending 30 August, much bigger than the draw of 1 million barrels analysts forecast in a Reuters poll.
Oil was also boosted by the decision by the Organization of the Petroleum Exporting Countries and allies led by Russia, known collectively as OPEC+, to delay a planned oil output increase for October and November until December.
However, supply disruptions in Libya — triggered in recent days amid a political standoff over the central bank and oil revenue — show signs of easing as some tankers were allowed to load crude from the OPEC member's storage even as output remained curtailed.
What they said: Commenting on the decision by OPEC+ countries to delay output increases, RBC Capital Markets' head of global commodity strategy Helima Croft said: "While today’s move is unlikely to serve as a significant price accelerator, it may indeed undercut the bearish narrative that was gaining traction in a corner of the market that the group was set for a breakup and that a sequel to 2015/March 2020 was in the offing".
"Essentially, today’s move undermines the argument that the proposed taper plan was something of a runaway train without a brake," she said.
The sources: Reuters, RBC Capital Markets research, ASX announcement
