Bad weather and geopolitical turmoil have boosted the energy sector to the top of the stock market leaderboard in 2026, and there could be stronger gains to come.
The S&P 500 energy sector is up more than 10% in 2026, handily outpacing the 1% gain in the broader index. Temperatures have plummeted across the US, raising the outlook for energy demand, while geopolitical tensions have increased the risk to supply.
Adam Turnquist, chief technical strategist at wealth management firm LPL Financial, says there are technical signals flashing in the sector that point to gains piling up from here.
“Technically, the energy sector has finally cleared resistance off the 2014 and 2024 highs, checking the box for a breakout from its multi-year range,” Turnquist wrote, adding that the sector could rally another 20% from current levels.
LPL Financial
“From a near‑term perspective, energy appears overbought, making a retracement to the prior breakout level a reasonable expectation,’ Turnquiest told Business Insider. “That area should serve as an important test for the bulls. A successful retest would reinforce the breakout thesis, while a failure to find support would increase the risk of a false breakout.”
While crude oil has steadily declined in the last year on outlooks for heavy supply and uncertain demand, energy markets recently have been boosted by a brutally cold winter in the US and potential disruptions to crude flows amid geopolitical tensions. Commentators have warned of the potential for oil shocks that could send energy prices surging.
Turnquist noted that he thinks oil futures will need to top $62.25, up from their current price of $60.94, in order for the boom in the energy sector to feel sustainable. While it hasn’t proven a lasting recovery yet, that type of strength would add to the bull case.
“For WTI crude, the 200-day moving average near $62.25 will be a big test, as it also overlaps with a prior intra-day high registered earlier this month,” he said. “A breakout above this area would raise the probability of the cycle low being reached near $55 but technical evidence suggests it would be too early to call make the call that an uptrend is underway.”