Dec. 24 at 8:59 PM
Oil stocks delivered a rare divergence in 2025, rising despite a sharp drop in crude prices. The Energy Select Sector SPDR ETF gained about 3% this year even as West Texas Intermediate crude fell 19%, marking the first time this century that energy stocks advanced while oil declined by more than 10%. The move lagged the broader market but stood out given historical patterns.
The resilience reflects the ETF’s heavy weighting toward Exxon Mobil and Chevron, whose shares are up 12% and 3%, respectively. Investors have been willing to assign higher valuations, supported by a more favorable regulatory backdrop, aggressive cost-cutting, share buybacks, and strong, well-covered dividends that now rival or exceed utility yields. Lower break-even costs and solid downstream results, particularly in refining, have also helped offset weaker oil prices.
Valuation multiples have expanded sharply as optimism around future cash flows has grown.
$XLE $SPX $XOM $CVX