Stocks in the energy sector such as Chevron have been pressured by falling oil prices in recent years. Photo: Nicole Craine/Bloomberg News

Energy was the S&P 500’s worst-performing sector each of the past two years—and so far, 2020 isn’t looking any better.

The group has dropped 8.3% this month, on pace for its worst January since 2008. That is by far the weakest performance of the 11 sectors in the S&P 500 and compares with a gain of 1.6% for the index as a whole.

The fortunes of energy stocks are closely tied to oil prices, which have slumped lately on concerns about the outbreak of coronavirus in China and its potential effects on global economic growth.

Brent crude, the global oil benchmark, has fallen 12% this year and is on pace for its worst January since 1991, according to Dow Jones Market Data. The epidemic has already crimped jet-fuel consumption, with several airlines reducing or grounding flights to China.

More broadly, the stocks in the sector have been battered since oil prices started sliding in 2014, as they struggle to make money when oil falls below key thresholds. Even when oil regained some of its value, rising costs ate away at profits.

The recent weakness in energy shares is broad: Of the 28 companies in the sector, only two are in positive territory. Shares in one of them, Apache Corp., jumped earlier this month after an oil discovery. The sector had fallen in seven of eight trading sessions before rising Thursday.

Among the big decliners, oil-field services company Schlumberger Ltd. said earlier this month that it is pulling back from the U.S. amid a slowdown in shale drilling. Its shares have fallen 15% in January.

Shares of Hess Corp. fell 6.9% Wednesday after the company reported a quarterly loss that exceeded expectations as average selling prices fell and expenses grew. The stock is down 12% year-to-date.

Meanwhile, Chevron Corp. and Exxon Mobil Corp. are among the weakest performers in the Dow Jones Industrial Average, falling 7.6% and 7.2%, respectively, to start 2020. Both companies are scheduled to report earnings Friday morning. The index as a whole has risen 1.1% this year.

Analysts at Goldman Sachs blamed the pullback in shares of exploration-and-production companies both on weather-related demand and on the recent outbreak in China.

“After a strong December, E&P stocks have sharply fallen in January due in our view to demand concerns driven in part by mild winter weather and, more recently, the spread of coronavirus,” they wrote in a note this week.

Earnings season appears unlikely to offer relief for the battered stocks. Analysts expect earnings from energy companies to plunge 40% this quarter from a year earlier, compared with a decline of 0.2% for the S&P 500 as a whole, according to FactSet.

And of the energy companies that have reported so far, about 29% have fallen short of expectations, worse than the approximately 20% of companies with negative surprises across the broad stock index.

Write to Karen Langley at karen.langley@wsj.com

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