The U.S. Energy Information Administration projected a 6% decline in average national gasoline pump prices in 2026 compared with this year’s levels, citing easing crude oil benchmarks and rising refining throughput. The EIA’s short-term outlook anticipates benchmark Brent crude falling to an annual average of $75 per barrel next year, down from $83 in 2024, while U.S. refinery utilization rates climb to 93.5% from 91.8% this year. This combination of lower input costs and stronger downstream capacity is expected to compress crack spreads, reshaping revenue profiles across integrated energy names in the XLE portfolio.

On the day the EIA update was released, the Energy Select Sector SPDR Fund (XLE) jumped 2.5% in New York mid-morning trading, outpacing the broader S&P 500’s 0.8% gain. Trading volumes surged 40% above the 30-day average, suggesting heightened speculative interest. Investors rotated into larger-cap oil majors within XLE—driving outperformance by integrated players that benefit most from stable refining margins—while smaller exploration and production names saw more muted inflows.

With XLE’s year-to-date total return perched at 12.7% through the first three quarters, portfolio managers are reviewing sector weightings ahead of 2026. The anticipated gasoline price drop may pressure component dividends tied to refining cash flows, but it also improves free-cash-flow outlooks at major oil producers by cutting operating expenses. As of December, XLE yields 3.1%, making it the highest-yielding broad sector ETF in the S&P 500 lineup and a candidate for enhanced allocations by income-focused funds looking to lock in above-average distributions before next year’s pricing cycles.