This Sector Is About to Surge: 2 Energy Stocks Set to Breakout

Oil prices have been trending lower all year, recently testing a key level of support. But that narrative shifted sharply this week. Following a fresh round of US sanctions targeting Russian oil exports and putting major buyers like India and China in the crosshairs, WTI crude has surged nearly 10% just this week off its lows.

After months of rising supply and weakening prices, this escalation has sparked a powerful rebound in oil and reignited momentum across leading energy names. Par Pacific (PARR) and Exxon Mobil (XOM) stand out for their strong price action, healthy cash flows, and favorable Zacks Ranks.

With crude prices firming, interest rates moving lower, and the broader economy still resilient, energy stocks may be on the cusp of a new bull run, ending nearly two years of stagnation.

Exxon Mobil: Stock on the Verge of Major Breakout

Exxon Mobil stands out as one of the most technically compelling setups in the entire energy sector. While it does not currently enjoying upward trending earnings estimate revisions, its chart and massive cash flows more than make up for it.

From a fundamental perspective, Exxon’s position remains exceptionally strong. The company is generating a free cash flow yield of roughly 6.9%, well above its 10-year median of 4.8%. Exxon has steadily used its massive cash generation to fund dividends, repurchase shares, and invest in new energy projects, all while maintaining one of the strongest balance sheets among global majors.

Turning to the technical picture, the real story here unfolds on the long-term chart. For over two years, XOM’s stock price has been consolidating within a broad, well-defined trading range. This sideways movement has formed a large bull flag pattern, suggesting that the stock has been quietly building energy for its next major move.

Currently, XOM is pressing against the upper boundary of that pattern around the $117 resistance level. A decisive breakout above this zone would mark the stock’s first significant move to new highs since late 2024 and could trigger a powerful upside continuation. With crude oil prices rebounding sharply in recent sessions, this breakout setup may finally be primed to play out.

Parr Pacific: Shares Rally on Earnings Upgrades

Par Pacific has seen a dramatic turnaround in sentiment thanks to a wave of upward earnings revisions over the past two months, earning it a Zacks Rank #1 (Strong Buy) rating. Analyst estimates have surged by as much as +249% for the next quarter and +113% for the current year, reflecting a sharp improvement in profitability expectations as refining margins and demand dynamics strengthen. Despite this upgrade cycle, the stock remains attractively valued, trading at just 10.4x forward earnings.

From a technical standpoint, PARR has been one of the standout performers in the energy sector. Until recently, the stock had been coiling within a bullish momentum pattern, suggesting a buildup of buying pressure beneath the surface. That tension finally released this week, as shares staged a major breakout, confirming the bullish setup that had been developing for months.

While the initial breakout move may have already played out, the combination of improving fundamentals, favorable industry trends, and strengthening oil prices suggests there could still be meaningful upside ahead. Even after the surge, PARR remains a compelling mid-cap energy name benefiting from both earnings momentum and sector tailwinds.

Should Investors Buy Shares in XOM and PARR?

After nearly two years of sluggish performance, the energy sector is starting to show signs of life again. The combination of rebounding oil prices, easing financial conditions, and resilient global demand is creating the perfect setup for a renewed uptrend in select energy names.

Exxon Mobil offers a steady, large-cap way to play the move, backed by strong free cash flow, a reliable dividend, while Par Pacific brings higher volatility but also higher return potential. With surging earnings estimates and a confirmed technical breakout already underway.

Together, they offer balanced exposure to what could be the start of a powerful new bull phase in energy stocks.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research