Energy stocks survive market sell-off in January amid record oil price rally

Energy was one of only two S&P 500 sectors to close the first month of 2022 with positive returns, as the S&P 500 Energy index logged gains of 19.1% in January.

According to analysts, the discipline of U.S. shale oil and gas producers in returning cash to shareholders rather than spending on growth has set the sector up for another year of outsized stock market gains in 2022.

Oil prices keep hitting fresh record highs since the start of the year, with global oil benchmark Brent crude futures topping $90 a barrel for the first time since 2014 on Jan. 26.

The broader S&P 500 index logged a negative return of 5.2%, while the S&P 500 Utilities index recorded a negative return of 3.3%.

Halliburton Co. topped the list of best-performing energy stocks, with a total return of 34.4%.

Halliburton said it sees economic growth accelerating in both North America and internationally over the next few years, spurring the company to nearly triple its quarterly dividend. The oilfield services company swung to a fourth-quarter 2021 net profit and reported revenue that rose above forecasts.

Schlumberger Ltd. posted a total return of 30.5% in January. The company recorded higher revenue and earnings in the fourth quarter of 2021 as recovering oil sector activity lifted the company's profitability.

Other top gainers in the sector included Occidental Petroleum Corp., EOG Resources Inc. and Hess Corp., all recording increases of above 20%.

Among electric and diversified utilities, the top-performing stocks logged single-digit increases, led by NiSource Inc. and Sempra.

On the flip side, NextEra Energy Inc. recorded a negative return of 16.3%.

NextEra shed about $18.5 billion of market capitalization over two days in the last week of January as Wall Street signaled it was surprised by a change to top leadership.

"We attribute most of the stock weakness to the unexpected announcement that rock star CEO Jim Robo will be retiring soon," Scotia Capital (USA) Inc. analyst Andrew Weisel wrote in a Jan. 28 pre-market report.

American Water Works Co. Inc. also recorded a double-digit decline in January, while AES Corp., Edison International and NRG Energy Inc. all posted a single-digit drop in their stock prices.