Energy Musings - October 1, 2025
Energy stocks were holding their own during September until oil prices dropped significantly during the final two trading days. That negativity drove Energy's performance.
September Was A Bummer For Energy
The heady days of June to August for Energy came to a crashing end in September. The sector posted a negative 0.4% result for the month, sending it from the top third of the sector rankings to a ninth-place finish.
Interestingly, September’s performance did not completely derail the Energy sector’s third-quarter or year-to-date rankings. For the July-September quarter, Energy posted a 6.2% gain, which put it in fifth place behind Information Technology, Communications Services (TELS), Consumer Discretionary, and, surprisingly, Utilities. During that quarter, the Standard & Poor’s 500 Index posted an 8.1% gain, so Energy’s results were not disastrous.
In the year-to-date ranking, Energy finished September in seventh place with a 7.0% gain. Unfortunately, Energy’s gain was about half that of the S&P 500, which posted a 14.8% appreciation. This confirms how challenging the investment market is for Energy companies.
Energy stocks fell towards the bottom of the rankings in September.
As we know, at a high level, the fortunes of Energy stocks are a function of current oil prices more than future projected prices. The algorithms that drive much of today’s stock market action are designed to identify positive and negative words and events. Thus, the talk of a further increase in OPEC exports and the impending shutdown of the U.S. government sparked a sharp fall in oil prices, both spot and futures, during the final two days of September. Both oil price markers fell by about $3 a barrel, from the middle of the $60-$70 range to close to the bottom.
Current oil prices heavily impact energy stocks.
In the face of the oil price roller coaster of the past few months, it is only surprising that August’s performance of Energy was as strong, given the trend in monthly average oil prices. The further decline in oil prices in late September, along with speculation about an impending global oil glut in the fourth quarter, contributed to the negative monthly performance. It is only surprising that the monthly decline was as small as it was, which suggests that Energy stocks may be on the shopping lists of value investors. We will have more to say about the Energy landscape in an upcoming Energy Musings article.