The Dow Jones Industrial Average has been on a tear recently. The market index rallied 20.4% from its bottom at the end of September to the last day of November. As a result, it has technically exited bear market territory. However, it's still down about 5% for the year, while other market indexes have fallen even further. 

Throughout all that volatility, one thing has remained constant: Oil giant Chevron (CVX 0.46%) has outperformed its fellow Dow members by surging more than 55% this year. That's by far the best performance in the Dow (Merck is second with a 43% gain). Here's a look at whether the company can continue delivering attractive returns for investors. 

A record year on many fronts

Chevron is having a record-breaking year, with $11.2 billion in net profit in the third quarter, nearly double what it produced in the year-ago period and slightly below the record $11.6 billion profit in the second quarter. Meanwhile, cash flow from operations reached a record $15.3 billion in the third quarter. 

That strong showing has given Chevron's stock the fuel to rally sharply this year. Shares hit a new all-time high closing price of $186.61 in mid-November. 

Chevron has been using its record profits to continue growing shareholder value. The company increased its dividend for the 35th straight year. It has also paid down debt, ending the third quarter with a net debt ratio below 5%, well under its 20% to 25% target range. It has also increased the rate of its share repurchase program three times.

Meanwhile, it invested in growing its traditional and new energy businesses, including acquiring Renewable Energy Group to become the country's second-largest biorenewable diesel producer. 

Does Chevron have what it takes to continue rising?

Higher oil and gas prices have contributed to Chevron's strong year. The company capitalized on triple-digit oil prices in the second quarter (following Russia's invasion of Ukraine) to post record profits. Meanwhile, it benefited from higher natural gas prices in the third quarter, which helped offset lower crude pricing. 

As an oil and gas producer, profits and cash flow will rise and fall with energy prices. While commodity prices are impossible to predict, many experts expect them to remain elevated over the next year. A recent Reuters survey of economists found that they foresee Brent oil, the global pricing benchmark, averaging $93.65 per barrel in 2023. That's above the current level in the mid-$80s. 

One reason economists expect oil prices to remain high over the next year is the impending ban on Russian oil by the European Union. It could cause a shortfall in global oil supplies as buyers look for alternatives. 

This view that oil prices will remain elevated comes even though there's lots of economic uncertainty. On one hand, if the economy slows significantly, it could sap oil demand. On the other hand, if the global economy remains resilient, prices could go even higher.

And there are other potential catalysts to oil prices, including a potential for more demand in China if it abandons its zero-COVID strategy or if there's an unexpected supply issue. Because of that, in a recent speech, Chevron CEO Michael Wirth said that the risks in the oil market were "skewed more to the upside."

The prospects of continued strong oil pricing bode well for Chevron. It would enable the company to generate robust earnings and gobs of cash flow in the coming year. That would allow it to continue increasing its dividend, pay off more debt, buy back more shares, and invest in expanding its traditional and new-energy businesses. Those drivers should help grow shareholder value.

Chevron's rally might not be over

Chevron has delivered market-crushing returns this year, with higher oil and gas prices giving it the fuel to produce record profits. While it's anyone's guess where oil prices will be in 2023, most economists expect crude to remain strong. That could allow Chevron's stock to continue rising next year, no matter if it's a bull or bear market.