NEW YORK, January 1, 2026, 1:54 PM ET — Market closed
- The S&P 500 energy sector ended the last session down, lagging as crude prices capped a sharp yearly drop.
- Oil settled lower on Dec. 31 and posted its steepest annual decline since 2020, keeping pressure on producers and oilfield services names.
- Traders are watching an OPEC+ meeting on Jan. 4 and fresh U.S. inventory data early next week for signs the supply glut is easing.
Energy stocks ended 2025 weaker, tracking a late-year slide in crude that left oil prices with their steepest annual drop since 2020. U.S. markets are shut on Thursday for New Year’s Day, leaving investors to recalibrate positions ahead of Friday’s reopening.
The timing matters because many energy shares still trade as a proxy for oil. Lower crude prices can compress cash flow for producers and slow spending on drilling and well services, while also shaping inflation expectations through gasoline and diesel costs.
In the final session of 2025, the S&P 500 Energy sector index fell 0.52% to 687.34, according to S&P Dow Jones Indices. The Energy Select Sector SPDR Fund (XLE) closed at $44.74, down about 0.5% on the day.
Some of the pressure showed up in gas and services names tied closely to near-term commodity prices and drilling activity. EQT Corp slid 1.9%, while oilfield services firms were mixed to lower: SLB fell 0.44%, Baker Hughes dropped 1.19% and Halliburton lost 0.81%, according to Reuters and MarketWatch data.
Oil set the tone. U.S. West Texas Intermediate (WTI) crude, the main U.S. benchmark, settled down 0.8% at $57.42 a barrel on Dec. 31, while Brent, the global benchmark, fell 0.8% to $60.85; both contracts posted annual losses of about 19%, Reuters reported.
Analysts pointed to oversupply and softer demand expectations as the core driver, even as some producers cushioned revenues by locking in prices earlier. “U.S. shale producers were able to hedge at high levels,” BNP Paribas analyst Jason Ying said. Reuters
Traders are now looking to OPEC+ — the Organization of the Petroleum Exporting Countries and allies including Russia — for a signal on output policy. Reuters reported the group is due to meet on Jan. 4, with investors watching whether producers extend or deepen supply curbs to counter the glut.
Washington also added a geopolitical layer late Wednesday, imposing sanctions on four companies it said were operating in Venezuela’s oil sector and targeting four vessels. The U.S. Treasury said the move raises the risks for those involved in Venezuelan oil trade, while Reuters reported earlier U.S. actions helped cut Venezuela’s oil exports to about half of November levels.
On the U.S. data front, the Energy Information Administration said crude inventories fell by 1.9 million barrels to 422.9 million in the week ended Dec. 26, while gasoline and distillate stocks rose sharply on strong refining activity. Analysts cautioned that year-end tax-related inventory shifting can distort late-December readings, Reuters reported.
That mix — year-end positioning, policy headlines and inventory noise — is leaving energy investors focused on whether crude can stabilize after slipping below $60 a barrel for WTI and Brent. A firmer tape typically supports integrated majors and refiners, while persistent weakness tends to weigh more heavily on producers and service companies that rely on upstream spending.
Before the next session on Friday, traders will be watching whether crude can hold recent support around the upper-$50s in WTI and whether energy stocks follow broader equity risk appetite after year-end thin trading.
Early January also brings fresh scheduled data. The EIA has said it will implement a new information release system for the Weekly Petroleum Status Report starting Jan. 7, a dataset closely watched because it can move oil prices through shifts in inventories, imports and refinery runs.
Beyond inventories, the next set of supply-and-demand projections is on deck. The EIA said the next Short-Term Energy Outlook is due on Jan. 13, which could update official views on production, demand and price trends after oil’s 2025 slide.
