ASX energy stocks struggle ahead of US inflation results

A broad-based selloff is sweeping ASX energy stocks as oil prices snapped a three-day win streak overnight. 

The ASX 200 energy sector is down 1.8% led by losses from large caps Woodside Petroleum (ASX: WPL), Santos (ASX: STO), Beach Energy (ASX: BPT) and Oil Search (ASX: OSH).

Renewed covid concerns weighed on oil sentiment as more countries reintroduced restrictions aimed at curbing social mobility. 

Covid cases have continued to climb across Europe, most notably in Germany, France and the UK, where all three countries are reporting more than 50,000 cases a day.

Tough restrictions

To combat rampant cases, Germany announced tougher restrictions on the unvaccinated, while the UK is recommending people to work from home and reintroducing mask mandates. 

"Thus far, implications of the mobility restrictions associated with the omicron variant on demand are minimal, but the variant's higher transmissibility could still lead to additional mobility restrictions in coming weeks and months," TD Securities analysts said in a note, according to S&P Global Platts.

Eyes on inflation 

The market is exhibiting a more cautious tone ahead of the US Labor Department’s November consumer price index report on Friday. 

Economists surveyed by the Dow Jones expect year-over-year inflation to be 6.7%, the highest figure since 1982. 

Investors will look to see if the figures over or undershoot expectations and what kind of reaction that might trigger from the US Federal Reserve.

If the figures top expectations, the Fed might look to accelerate its bond-taper program, which could add further pressure on the US dollar and oil prices.