Energy stocks have recorded substantial gains since the start of the year, a trend that analysts view as a positive indicator for the oil market's performance throughout the remainder of the year. The S&P 500 Energy Index has risen approximately 21% year-to-date, outpacing all other sectors. According to Bespoke Investment Group, this marks the second strongest start to a year since 1990, only surpassed by 2022, when oil prices surged as the global economy recovered from the pandemic.

A strong beginning for energy stocks has historically been followed by a strong finish: data compiled by Bespoke Investment Group shows that in the three previous instances when the energy sector gained at least 10% from the start of the year through mid-February, it went on to rise by at least another 15% over the rest of the year.

Investors are increasingly taking note. Data indicates that in January, they allocated $2.6 billion to the State Street Energy Select Sector SPDR ETF, the largest monthly inflow since 2008.

Oil prices have continued to climb this year due to persistent geopolitical tensions involving Iran, stricter sanctions on Russian exports, and risks of supply disruptions along major shipping routes.

Strategists at DataTrek Research compared the relative performance of the energy sector against the S&P 500 and reached a similar conclusion. DataTrek’s analysis shows that since 2015, there have been seven occasions when the energy index outperformed the S&P 500 by at least 20.9 percentage points over a 50-day period. In each case, the energy index continued to outperform the S&P 500 over the following 50 days.

Additionally, DataTrek co-founder Nicholas Colas noted that the energy sector’s weighting in the S&P 500 is just over 3%, providing ample room for investors to increase their exposure to the sector within their portfolios. He wrote, “The energy sector is one S&P 500 constituent we would never recommend underweighting. During geopolitical or oil crises, it is often the only sector that rises.”

However, the rally stalled on Thursday as shares of energy companies declined alongside a broader market downturn. Numerous uncertainties—including economic conditions, geopolitical developments, and even the impact of artificial intelligence—could potentially disrupt historical patterns in 2026.