Can Energy Stocks Bounce Back in 2021?

Energy stocks significantly underperformed broader markets in 2020. Not just small names, but leading oil and gas stocks also got crushed during the year. A steep fall in the demand for oil products due to the coronavirus pandemic disrupted oil prices as well as the performance of oil companies. With 2020 ending, what lies ahead for energy stocks? Let's discuss the factors at play which will decide the fate of energy companies in 2021.

Top integrated oil stocks, including Chevron (NYSE: CVX), ExxonMobil (NYSE: XOM), Royal Dutch Shell (NYSE: RDS.A) (NYSE: RDS.B), and BP (NYSE: BP), got pummeled in 2020. While BP fell more than 40%, Chevron is down more than 25% year to date. With its massive capital plans, ExxonMobil had a particularly rough year. Royal Dutch Shell's dividend cut, for the first time in 75 years, speaks volumes about how bad things were for energy companies. Energy sector stocks substantially underperformed the S&P 500 Index, which is up more than 14% year to date.