NEW YORK, Dec. 27, 2025, 1:32 p.m. ET — MARKET CLOSED
Energy stocks are heading into the final stretch of 2025 with a familiar push-and-pull: geopolitical headlines are keeping crude traders on edge, but the bigger narrative remains oversupply—one that has capped rallies and helped keep a lid on valuations across many oil-linked equities.
With U.S. markets closed for the weekend, investors are digesting Friday’s post-holiday session and preparing for catalysts that can quickly reset sentiment when trading resumes Monday—especially the next round of U.S. government energy data and any weekend developments tied to Ukraine and Venezuela.
Where energy stocks stood before the weekend
Energy broadly softened into Friday’s close, tracking the dip in crude while the broader equity market stayed near record territory. The S&P 500 Energy sector index finished Dec. 26 down about 0.28% on the day, and it is up roughly 3.74% year-to-date—well behind the broader market’s 2025 gains. [1]
For investors who benchmark with the Energy Select Sector SPDR Fund (XLE), the ETF ended Friday at $44.20 after trading in a roughly $43.99–$44.44 range. [2]
That “steady-to-soft” tape matters because it highlights the current market dynamic: energy equities are not collapsing with oil, but they also aren’t pricing in a big commodity rebound yet. The sector’s ability to hold ground while crude weakens has been a theme late this year—driven in part by capital discipline, dividends, and buybacks—but near-term price action still tends to be dominated by where WTI and Brent settle. [3]
Oil’s weekend backdrop: “oversupply narrative” wins the day
Crude gave energy bulls a reality check Friday. Brent settled at $60.64 a barrel (down 2.57%), while WTI settled at $56.74 (down 2.76%), as traders weighed the risk of a looming supply glut even as geopolitical headlines stayed active. [4]
Aegis Hedging analysts summed up the tension neatly in a Friday note, saying geopolitical premiums may provide near-term support but “have not materially shifted the underlying oversupply narrative.” [5]
That oversupply debate is not just a trading desk talking point—it’s anchored to forecasts from major agencies. The International Energy Agency’s December oil market report points to continued supply growth into 2026 that outpaces demand growth, with balances implying a multi-million-barrel-per-day surplus environment through late 2025 and 2026. [6]
In practical terms for oil stocks: when the market believes inventories can build easily, the “floor” under crude can feel softer—especially in thin holiday liquidity—because traders don’t have to price in scarcity.
The weekend risk: Ukraine peace headlines and Venezuela enforcement
Even with oversupply front-and-center, energy markets are still vulnerable to headline-driven gaps when liquidity returns.
Ukraine/Russia peace process: Investors are watching weekend talks closely, because any credible progress that points toward easing sanctions on Russia’s oil sector could add more supply—or at least shift expectations about how much constrained Russian oil may return. BOK Financial’s Dennis Kissler said the “negatives” for crude include elevated global storage and “slight progress” on peace talks. [7]
Venezuela enforcement: The White House has signaled an emphasis on economic pressure related to Venezuelan oil flows, but Kissler also cautioned the “global impact” on crude prices looked minimal at the time. For energy equities, that’s an important nuance: if enforcement headlines don’t translate into meaningful barrels being removed from the market, the oversupply theme tends to reassert itself. [8]
A late-year equity market near 7,000 changes the playbook for energy
Energy stocks don’t trade in a vacuum—especially late in the year when cross-sector rotation can dominate daily price action.
On Friday, U.S. equities ended nearly flat in light post-Christmas trading. Ryan Detrick, chief market strategist at Carson Group, described it as the market “catching our breath” after a strong run and noted investors were still in the “Santa Claus rally” window. [9]
Looking ahead, Reuters’ week-ahead reporting highlighted that the S&P 500 was hovering about 1% from 7,000 and that investors are watching for potential volatility from year-end portfolio adjustments—especially when low volumes can exaggerate moves. [10]
For energy investors, this matters because:
- A strong index-level rally can pull capital into “risk-on” corners of the market—sometimes lifting oilfield services, exploration and production (E&Ps), and smaller-cap energy names.
- But if rate expectations shift, energy can swing with the dollar and real yields.
On the macro calendar, Fed minutes are due next week, and market participants remain focused on the path of rate cuts after the Fed’s benchmark rate landed in the 3.50%–3.75% range following multiple 2025 cuts, per Reuters. [11]
LNG and natural gas stocks: growth story meets “bubble” talk
Energy stocks tied to U.S. natural gas, LNG export infrastructure, and global gas demand have been one of the market’s most debated “energy transition” trades—caught between electrification-driven demand growth and the accelerating economics of renewables.
A Reuters Breakingviews column this week warned that the LNG market could face a painful downcycle by 2030 if planned supply expansion collides with faster-than-expected adoption of solar, wind, and batteries. The commentary pointed to a push by major producers (including Exxon Mobil, Shell, and Woodside) to raise global LNG output by around 50% by 2030 (citing IEA-related estimates) and framed the buildout as potentially bubble-like. [12]
The column also highlighted notable industry skepticism:
- TotalEnergies CEO Patrick Pouyanné said the sector is “building too much.”
- Vivek Chandra, head of Gulfstream LNG, characterized the mood at the industry conference as “irrational exuberance.” [13]
For LNG-linked equities, investors are balancing two competing forces:
- Near-term demand support: Europe’s LNG import dependence post-2022 and incremental demand from power-hungry data centers.
- Medium-term substitution risk: Falling battery costs and faster deployment timelines for renewables—factors that can reduce the need for new gas-fired generation over time. [14]
Renewables and solar equities: Beijing steps in on “price wars”
Energy investing in 2026 is not just about oil and gas. Clean energy stocks—particularly solar—remain sensitive to policy signals, financing conditions, and pricing discipline in the supply chain.
On Friday, China’s market regulator urged the solar industry to curb deflationary price wars and warned firms against unfair pricing practices such as collusion and fraud, while promising tighter quality supervision and enforcement. [15]
For publicly traded solar manufacturers and the broader renewable supply chain, that kind of messaging can move sentiment quickly: it can be read as a step toward stabilizing profitability (if it reduces destructive pricing), but it can also signal regulatory scrutiny that creates uncertainty around margins and business practices.
One more global supply note: Petrobras strike headlines
Outside the U.S., energy supply headlines can still influence Monday’s tape—especially in a market that’s already laser-focused on “how many barrels are really at risk?”
Late Friday, Reuters reported that Brazil’s Sindipetro-NF union rejected Petrobras’ latest proposal to end a 12-day strike. Petrobras said the strike had not impacted production due to contingency crews, but the continuation adds uncertainty around operations at some sites. [16]
If you own energy stocks, here’s what to watch before Monday’s open
With the market closed, the most important work for energy investors is identifying which catalysts can reprice the group quickly when liquidity returns:
1) The next U.S. oil inventory data (timing matters this week)
The U.S. Energy Information Administration (EIA) shows the next Weekly Petroleum Status Report release is scheduled for Monday, Dec. 29, 2025, instead of the usual Wednesday timing, due to federal government closure-related scheduling changes. [17]
Why it matters: inventory surprises can move crude, refined products, and—by extension—integrated majors, refiners, and E&Ps in a hurry.
2) The delayed natural gas storage report
EIA’s schedule shows the Weekly Natural Gas Storage Report (typically Thursday) is also shifted to Monday, Dec. 29, at 12:00 p.m. ET. [18]
Why it matters: gas storage data can swing Henry Hub and ripple into gas-weighted producers and LNG-linked names during the trading session.
3) Weekend geopolitical headlines
Watch for concrete developments tied to:
- Ukraine-Russia negotiations and sanction pathways. [19]
- Venezuela enforcement signals and tanker-related actions. [20]
In thin year-end markets, even modest headlines can drive outsized price moves.
4) Equity market “plumbing” into year-end
Reuters’ week-ahead coverage emphasized that year-end adjustments can inject volatility, and light trading volumes can exaggerate moves. [21]
Energy investors should be prepared for sharp intraday swings that are more about flows than fundamentals—especially in smaller-cap energy and high-beta oilfield services.
5) LNG and renewable narrative shifts
Keep an eye on:
- Any additional LNG project commentary or demand outlook updates, as debate grows over whether the sector is overbuilding. [22]
- Policy and regulatory updates out of China affecting solar pricing and competition. [23]
Bottom line for Monday
Energy stocks are entering the last trading days of 2025 with crude prices pulled between two stories: geopolitics can still create short-term spikes, but the market’s base case remains that supply is ample enough to keep rallies contained. [24]
When trading resumes, the fastest-moving catalysts are likely to be data-driven (EIA oil and gas reports), headline-driven (Ukraine/Venezuela), and flow-driven (year-end positioning). In that environment, energy investors may want to focus less on day-to-day noise and more on which subsectors—integrated majors, E&Ps, refiners, oilfield services, LNG, and renewables—are best positioned if 2026 begins with volatility rather than a smooth continuation of the year-end rally. [25]
References
1. www.spglobal.com, 2. finance.yahoo.com, 3. www.reuters.com, 4. www.reuters.com, 5. www.reuters.com, 6. www.iea.org, 7. www.reuters.com, 8. www.reuters.com, 9. www.reuters.com, 10. www.reuters.com, 11. www.reuters.com, 12. www.reuters.com, 13. www.reuters.com, 14. www.reuters.com, 15. www.reuters.com, 16. www.reuters.com, 17. www.eia.gov, 18. ir.eia.gov, 19. www.reuters.com, 20. www.reuters.com, 21. www.reuters.com, 22. www.reuters.com, 23. www.reuters.com, 24. www.reuters.com, 25. www.reuters.com
