1 Big Reason to Avoid Energy Stocks in 2026 | The Motley Fool

If your portfolio is energy-heavy right now, or if you're thinking about putting additional funds into energy stocks , you may want to reconsider. Because there's one very important reason to avoid holding or buying energy stocks going into the new year: a growing global oil glut. There are currently 1.4 billion barrels of oil on the water -- i.e., oil being shipped to a port or stored and waiting for a buyer. That's 24% more than the average for this time of year from 2016-2024. As you might imagine, that glut has pushed oil prices down in a big way. West Texas Intermediate, the type of oil extracted from oilfields in the U.S., is currently trading at about $57 a barrel, $15 below where it started the year. Brent, the benchmark for oil from Europe, Africa, and the Middle East, is now priced at about $60 a barrel, also $15 below where it was at the beginning of 2025. And as a result, the average price of a gallon of gasoline in the U.S. has fallen below $2.90, the lowest it's been since the COVID-19 pandemic kept everyone at home. Falling oil prices are having an impact on share prices Falling oil and gasoline prices have begun to push energy stocks lower. The share price of oil giant Chevron ( CVX +1.44%) has been sliding since the beginning of September and is now down 9% since that recent peak. NYSE: CVX Key Data Points ExxonMobil ( XOM +1.25%) has held up a bit better, though it's been trending lower over the past month. ConocoPhillips ( COP +1.49%) is off about 9% since a recent peak in early September. NYSE: XOM Key Data Points Occidental Petroleum ( OXY +1.64%) is off 20% for the year and Marathon Petroleum ( MPC 2.11%) is off 16% over the past month. NYSE: OXY Key Data Points Basically, most stocks in the energy sector have been moving sideways or south in recent months. And it could get a lot worse in 2026 if the global glut continues or worsens. Oil sector analysts expect it to do just that. Nearly all of the world's largest oil traders expect a state of oil oversupply in 2026. The International Energy Agency forecasts that global oil supplies will outpace demand by more than 3.8 million barrels a day next year, which would be a record mismatch between supply and demand for petroleum. And the U.S. Energy Information Administration's latest outlook says rising inventories in 2026 will put downward pressure on oil prices in coming months, with Brent oil falling to $55 in the first quarter and remaining there through the end of the year. Image source: Getty Images. Big oil companies are paring workforces It seems that the biggest producers of oil are now bracing for it. In September Exxon announced 2,000 job cuts as part of a restructuring plan. ConocoPhillips, Chevron , and more than a dozen other energy companies have announced or are already proceeding with...

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