The energy sector has emerged as the strongest performer in the stock market during 2026, driven by extreme winter weather and rising geopolitical tensions that threaten global supply chains. According to technical analysts, the sector’s momentum could push gains significantly higher in the coming months as key resistance levels are breached.
The S&P 500 energy sector has climbed more than 10% in 2026, substantially outperforming the broader index’s modest 1% gain. Plummeting temperatures across the United States have increased energy demand forecasts, while international tensions have elevated concerns about potential supply disruptions.
Technical Indicators Point to Further Energy Sector Gains
Adam Turnquist, chief technical strategist at LPL Financial, identified critical technical signals suggesting the rally may have room to run. According to Turnquist, the energy sector has broken through resistance levels established in 2014 and 2024, representing a significant breakout from a multi-year trading range.
The strategist projects the energy sector could rally an additional 20% from current levels based on this technical breakthrough. However, Turnquist cautioned that near-term conditions appear overbought, making a pullback to prior breakout levels a reasonable expectation.
Testing Critical Support Levels
Turnquist told Business Insider that any retracement would serve as an important test for bullish investors. A successful retest would reinforce the breakout thesis, while failure to find support would increase the risk of a false breakout, according to the analyst.
Additionally, crude oil futures will need to surpass $62.25 per barrel, up from the current price of $60.94, for the energy sector boom to feel sustainable. This price level coincides with the 200-day moving average and overlaps with a prior intra-day high registered earlier this month.
Weather and Geopolitical Factors Boost Energy Markets
While crude oil prices have declined steadily over the past year amid expectations of abundant supply and uncertain demand, recent developments have shifted the outlook. The brutally cold winter gripping the United States has significantly increased heating fuel consumption, while international conflicts have raised the specter of supply disruptions.
Market commentators have warned about the potential for oil shocks that could send energy prices surging. These geopolitical tensions, combined with extreme weather events, have created a supportive environment for energy sector performance that contrasts sharply with the bearish sentiment that dominated much of the previous year.
Uptrend Remains Uncertain
Despite the positive technical signals and fundamental support, Turnquist emphasized that it remains premature to declare a sustained uptrend in crude oil. The strategist noted that a breakout above the $62.25 level would raise the probability that the cycle low was reached near $55, but technical evidence suggests more confirmation is needed.
Meanwhile, the divergence between energy sector stocks and underlying commodity prices reflects investor expectations that companies will benefit from current conditions even if crude prices remain range-bound. The sector’s ability to outperform during a period of relatively flat oil prices demonstrates the market’s confidence in energy companies’ operational efficiency and cost management.
Investors will be watching whether West Texas Intermediate crude can decisively break above the 200-day moving average in the coming weeks. The outcome of this technical test will likely determine whether the energy sector can maintain its leadership position or faces a period of consolidation as analysts assess the sustainability of current gains amid ongoing market uncertainty.
