West Texas Intermediate gained another 1% on Wednesday, pushing it well above $68 a barrel after OPEC+ doubled down on its decision to ease supply restrictions through July to keep up with demand. As West Texas Intermediate crude traded at its highest level since October 2018, energy stocks rallied alongside it. The XLE energy Exchange-traded fund added nearly 2%, pushing its two-day rally close to a 6% increase.
Todd Gordon, the founder of TradingAnalysis.com, said that the recent gains have stimulated energy stocks to break through a stubborn area on the charts.Gordon said that we have noticed that we have moved down into this old shelf of support here that was in play through 2019. We broke down in 2020 and the beginning of Covid, we’re coming back and we are retesting several times here. They are trying to get up through that resistance into about $55 here. So it looks like we should be able to poke through there.
The XLE Exchange-traded fund closed at $55.23, above $55 for the first time since February 2020. Gordon also said that it looks like the reopening is here, Covid cases are hitting new lows every month, summer driving season is here, He thinks that there’s a lot of demand as the economy is reopening, they are continuing to see the rotation into the reopening plays like energy, materials, or industrials.
The XLE energy Exchange-traded fund is by far the best-performing S&P 500 sector this year, rising by more than 45%. The S&P, by comparison, is up 12%. Gordon said there are two ways an investor can gain exposure to more upside outright: buying the XLE Exchange-traded fund or using options.