Old-Economy Energy Stocks Beating Most of S&P 500 on Cheap Oil

Shares of oil refiners, such as Valero Energy and Marathon Petroleum, have significantly outperformed the S&P 500 this year, rallying over 30% and surpassing 90% of its constituents, with smaller refiners like CVR Energy seeing gains of 83% and others doubling. This strong performance in the 'old-economy' energy sector, driven by factors including cheap oil, represents a notable market trend distinct from the dominant focus on tech and AI.

Analysis

Oil refiners are demonstrating significant market outperformance, a notable trend within the 'old-economy' energy sector that contrasts with the prevailing focus on technology and AI. Major refiners such as Valero Energy Corp. (VLO) and Marathon Petroleum Corp. (MPC) have recorded year-to-date gains of at least 30%, placing them in the top decile of S&P 500 performers according to 22V Research. The rally is even more pronounced among smaller-cap players, with Par Pacific Holdings Inc. (PARR) shares doubling in 2025 and CVR Energy Inc. (CVI) appreciating by 83%. This robust performance is occurring in an environment noted for 'cheap oil,' suggesting that favorable input costs are a key driver for the sector's profitability and stock momentum.

Key Decisions for Investors

• Investors should evaluate the oil refining sub-sector for potential alpha generation, given its significant, broad-based outperformance relative to the S&P 500.
• Consider the divergence in performance between large-caps like VLO and MPC and smaller players like PARR and CVI to determine the appropriate risk-reward exposure within the sector.
• Closely monitor crude oil price trends, as the 'cheap oil' environment cited as a driver represents a key variable; a sustained increase in input costs could compress refining margins and temper the sector's rally.