Apologies for the slow delivery of this November recap. It was a decent month, with energy generally outperforming the broad market. The S&P 500 gained +0.3% (YTD +17.8%), while the Nasdaq Composite fell -1.5% (YTD +21.7%). The diversified energy sector gained +2.9% (S&P 1500 Energy, S15ENRS), with subsector performance as follows: Midstream +6.2% (AMZ), Upstream +5.7% (XOP), and Oilfield Services +2.1% (OIH). Clean energy took a break in November at -1.8% (ICLN). Front-month WTI closed the month at $58.55/bbl, a decline of -3.8%. Natural gas took another step up at +17.6%, increasing from approximately $4.1/mmbtu to $4.85/mmbtu¹.
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Several consistent 2025 themes continued to play out in November.
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Consolidation
SM Energy (SM) and Civitas (CIVI) announced they would tie the knot, ending months-long speculation about who would be CIVI’s dance partner. Ovintiv also continued its expansion in Canada, announcing the acquisition of NuVista (NVA CN). The quest for inventory, size, scale, and value marches ahead. There will be more.
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Geopolitical
During November, a renewed push by the US for peace between Russia and Ukraine captured center stage. Both sides increased aggression and attacks on energy infrastructure to bolster bargaining positions, with oil markets focused on the “risk” of potential peace and more Russian volumes, a concern we believe is overstated. December brought another front of conflict, as the US took control of several sanctioned Venezuelan oil tankers. Squeezing the checkbook of Venezuela’s Maduro is textbook strategy, with the longer-term side benefit of regime change for the Trump Administration being likely Western capital investment and, eventually, higher Venezuelan oil production.
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Energy macro
OPEC+ finally slowed its return of production, pausing further increases while it assesses the health of the oil market. Newsflash, the patient is sick. WTI oil dipped into the mid-$50s during December as Chinese buyers slowed purchases and oil in transport reached record high levels. There are only two realistic relief valves to the current market: less OPEC+ supply or less US shale production. Apparently, both need even lower prices to be catalyzed. JP Morgan research recently highlighted the potential for WTI oil to trade into the $40s. We don’t like that number. We hate that number. But that might be what it takes for supply brakes to be applied. A ripped-off Band-Aid with near-term price pain might ultimately feel better than a longer-lasting $60/bbl purgatory environment.
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Reinforcing the age-old adage that weather matters, natural gas had an upside rip during November and early December, peaking at approximately $5.50/mmbtu. Gas bulls were euphoric and enjoying a victory lap, but the weather gods smote them quickly. Warmer forecasts took gas below $4/mmbtu within weeks. The current NYMEX 2026 calendar strip is approximately $3.75/mmbtu. We take the over.
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One other notable November event is worth mentioning. Private company Continental Resources took a 90% working interest in a Pluspetrol block in Argentina’s Vaca Muerta shale play. As US shale matures, over the next three to five years we expect an expansion of activity in conventional, offshore, and international plays. Argentina is an area to watch, as the country has become more investable, the play is similar to the US shale model, and existing players are open to foreign partners.
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Despite softer oil prices, energy stocks outperformed the S&P 500 in November by approximately 260 basis points as the AI rally faltered and investors rotated. We would like to believe that energy stocks are a coiled spring that has already fully reflected the risks in the crude market. Unfortunately, that would be our hearts talking, not our heads. We suspect the oil-related spring has further to coil and that we will find the bottom in 2026. The risk-reward in gassy equities remains more attractive.
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As always, we welcome your questions and comments.

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(1) Source: Bloomberg