Group 1 - Geopolitical factors are significant, but the 2026 energy markets are influenced by more than just headlines, indicating a complex landscape ahead [1] - The year 2026 will see the largest supply expansion in history, with traders preparing for a global surplus, which may lead to volatility in Henry Hub prices due to potential project delays [1] - Oil supply from countries like Ghana, Canada, and Brazil is increasing, presenting a dilemma for OPEC Plus regarding whether to lower output or accept lower oil prices [1] Group 2 - China's policies, including crude stockpiling and refined product export licenses, have the potential to drastically alter global market fundamentals overnight [2] - The correlation between the US dollar and oil prices may be tested, with central bank actions potentially leading to significant price movements for WTI in 2026 [2] - The demand for electricity driven by data centers is at its highest in 15 years, linking the AI boom to energy needs and influencing oil markets [2]

Precious Metals - Silver surged through the $100-per-ounce threshold, trading around $101 per ounce, marking a 230% gain over the past year [1] - Gold approached the $5,000-per-ounce level, which is nearly 80 percentage points higher than a year earlier [1] - Palladium increased by 6%, surpassing $2,000 per ounce for the first time since November 2022, while platinum rose 5% to all-time highs above $2,700 per ounce [2] Energy Prices - Henry Hub natural gas rose by 2% to $5.15 per million British thermal units, with week-to-date gains exceeding 60%, marking the strongest weekly surge on record due to extreme cold weather in America [3] - Crude prices also advanced, with WTI rising more than 2% to near $61 a barrel [3] Stock Market Performance - The S&P 500 traded broadly flat, while the Nasdaq 100 rose by 0.5%, and small caps lagged with the Russell 2000 falling by 0.6% [4] - The energy sector led the market for a second consecutive session, reaching levels last seen in 2014, while financials underperformed [4] Earnings and Major Movers - Intel Corp. experienced a significant decline of over 17% after issuing weak first-quarter 2026 guidance, marking its worst session since August 2024 [5] - In the Russell 1000, top gainers included Corcept Therapeutics Inc. (+6.71%) and Booz Allen Hamilton Holding Corp. (+6.40%), while top losers included Intel Corp. (-16.91%) and First Citizens BancShares Inc. (-8.88%) [6][8]

Core Viewpoint - Allete's shares have entered oversold territory with a Relative Strength Index (RSI) reading of 29.7, indicating potential buying opportunities as heavy selling may be exhausting [1][2][3] Group 1: Stock Performance - Allete shares traded as low as $63.555, with a current trading price of $63.65, reflecting a decrease of approximately 0.3% on the day [1][3] - The 52-week range for Allete shares is between $61.51 (low) and $66.40 (high) [3] Group 2: Technical Indicators - The average RSI for the energy stocks universe is 51.1, while WTI Crude Oil has an RSI of 47.5, and Henry Hub Natural Gas is at 41.4 [2] - The 3-2-1 Crack Spread RSI is currently at 45.6, indicating a relatively stronger position compared to Allete's RSI [2]

Investment Rating - The report maintains a selective and defensive bias, preferring gas over oil in the North American Energy sector [5][7]. Core Insights - WTI oil prices have increased approximately 20% in June due to geopolitical risks and a tight crude market, but prices are expected to trend lower in the second half of 2025 unless there are significant supply disruptions [4][28]. - The report emphasizes a preference for US natural gas over oil, with EQT identified as a top pick in the Exploration & Production (E&P) sector [7][9]. - Refining margins have improved significantly, with a 30% quarter-over-quarter increase, leading to 2Q EBITDA estimates that are about 10% above consensus [7][10]. Summary by Sector US Majors - The US Majors provide exposure to higher oil prices while maintaining resilience if prices decline, supported by strong balance sheets and integrated operations [9]. - Estimated free cash flow (FCF) yields for XOM and CVX are projected at 7% and 8% respectively at a WTI price of $65 [9]. US Exploration & Production (E&P) - The report retains a defensive stance, favoring US gas over oil, with a median FCF yield forecast of 9% for gas at $4.40 Henry Hub [9]. - Positive rate of change is a focus for oil producers, with OW-rated DVN and PR highlighted [9]. Canadian Producers - Large-cap Canadian oil sands operators are expected to perform in line with US peers, with a forecasted median shareholder return yield of 9% at $65 WTI [9]. Energy Services & Equipment (ESE) - Preference is given to international and offshore upstream exposure, gas over oil, and non-upstream exposure, with BKR and SLB identified as key stocks [9]. Refining & Marketing - Refining margins are expected to benefit from summer demand, with key stock picks including VLO and DINO [10]. Midstream Energy Infrastructure - Midstream remains misvalued, with a recommendation to wait for a better entry point before deploying new capital [13]. High Yield Energy (Credit) - The sector is currently underperforming, with a recommendation to focus on gas-levered and balanced commodity exposure over oil-levered credits [13].