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The 21% Surge in Oil Stocks Is Making Analysts Bullish on 2026

(Bloomberg) -- Oil-company stocks have surged sharply since the start of the year — and analysts see that as a bullish sign for the rest of it.

The rally stalled on Thursday, as the companies were pulled down in the broader rout, and there’s plenty of uncertainty — about the economy, geopolitics and even the fallout of artificial intelligence — that could cause 2026 to buck historic patterns.

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But the roughly 21% advance in the S&P 500’s energy index has outstripped every other sector so far this year. It’s the second strongest start to a year since 1990, according to Bespoke Investment Group data, exceeded only by 2022, when oil prices were surging as the world economy emerged from the pandemic.

For energy stocks, strong starts have tended to result in strong finishes: In the three previous instances when the sector rose 10% from the beginning of the year through mid-February, it went on to see gains of at least another 15% during the remainder of the year, according to data compiled by Bespoke Investment Group.

And investors are increasingly taking note: They poured $2.6 billion into the State Street Energy Select Sector SPDR ETF in January, the most since 2008, data compiled by Bloomberg show.

Oil prices have climbed this year amid lingering geopolitical tensions around Iran, tighter sanctions on Russian exports and the risk of supply disruptions along key shipping routes.

Strategists at DataTrek Research compared the sector’s relative performance with that of the S&P 500 and came to a similar conclusion. There’s been seven times since 2015 that the energy index has outperformed the S&P 500 by at least 20.9 percentage points over a 50-day period — and in each case it continued to outperform for the next 50 days, DataTrack figures show.

Beyond that, the energy industry’s weighting in the S&P 500 — at just over 3% — leaves ample room for investors to overweight their portfolios toward the sector, Nicholas Colas, co-founder of DataTrek wrote.

“Energy is the one S&P 500 group we will never recommend underweighting,” he wrote. “During geopolitical/oil shocks, it is often the only sector to rally.”