Are energy stocks back on the menu?

Energy stocks have been the top-performing sector since the start of the year.

They’ve rallied 31% in 2026. That’s nearly 8X what the S&P 500 has returned year-to-date, and nearly 4X what tech has produced. 

And yet, very few investors are talking about the group.

That’s because we just had a massive snap-back rally in risk assets. The S&P 500 has rallied 13% over the past month.

Semiconductors, which have led the charge, are up 34% over that same span.

Semis—and tech stocks in general—are sexy. They’re at the forefront of the artificial intelligence revolution, the dominant theme in today’s markets.

Energy, on the other hand, is messy. It’s dinosaur technology. It’s a macro theme that ebbs and flows with macro events, like the war in the Middle East.

But that’s no reason to overlook this group.

After all, the price of oil is still elevated. It’s trading just north of $100 a barrel. Yes, that’s 15% off the March highs. But it’s still 73% higher than where it traded a year ago, and 30% higher than where it stood in April 2024.

This is bad news for folks who drive big SUVs. But it’s great news for energy companies. It means they’re making a lot more money than in recent years.

The market understands this, and that’s why energy stocks are bouncing back.

Take a look at the chart below. Here we have the Energy Sector ETF (XLE). This fund invests in a basket of energy stocks, including Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX). 

XLE pulled back after tensions in the Middle East eased, but it didn’t break down completely:

In fact, XLE is starting to reclaim both its 50-day and 21-day moving averages. It’s getting back on track. 

Oil services stocks—the companies that build, repair, and maintain rigs—are even stronger. 

The Oil Services ETF (OIH) just broke out of a muti-week base. It’s now trading at the highest price since 2018. That ain’t bearish, folks.  

So, what’s the best way to take advantage of this opportunity?

Well, you could always buy an ETF like XLE, OIH, or the State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP).   

I expect all three of these funds to perform well in the months ahead. You could also buy individual names.

One group within energy that’s offering tons of great setups right now is the tankers. These companies move oil and liquified natural gas from Point A to Point B. The group is coming alive with tensions in the Middle East easing. 

International Seaways (INSW) is one of the leaders within the space: 

Teekay Tankers Ltd. (TNK) is also shaping up beautifully:

I’ve already recommended one of the leading tankers in my RiskHedge Live trading room, and it’s currently up 36% since January.

Depending on how the group performs—and how the situation continues to unfold in the Middle East—we may add to this strength in the weeks ahead.

If you’d like to follow along with us, you can learn more about becoming a RiskHedge Live member here.

Justin Spittler Chief Trader, RiskHedge