If Wednesday morning's oil inventory data prompt a spike in crude prices, the Energy Select Sector SPDR Fund could rally, CNBC "Fast Money" trader Brian Kelly said Tuesday.
U.S. benchmark West Texas Intermediate crude oil—battered to a 34 percent loss in the last year—settled up nearly 2 percent Tuesday at its highest level since December. Still, data in recent weeks suggest the oil industry is pumping out ample supply despite the price drop in the last year.
But if Wednesday's numbers prompt a second straight higher settlement for U.S. crude, oil services stocks may drive the Energy Select Sector SPDR Fund, ticker XLE, higher, Kelly contended.
"XLE is your way to play it. It has all those oil services names in it," he said.
Kelly pointed to oil services stocks, such as Baker Hughes and Halliburton, as having upside on a price increase. He noted that a continued slow in the decline of U.S. rig operations could help both of those names.
Both Baker Hughes and Halliburton have climbed more than 15 percent this year.
Shares of refiner Tesoro—which has also jumped more than 15 percent this year—looks "cheap on valuation," said trader Guy Adami. He called $85 per share, just below where the stock closed Tuesday, "critical support."
Trader Pete Najarian added that the Market Vectors Russia ETF, which has exposure to the country's oil industry, is "worth looking at."
Long AMAT, AAPL, BABA, BAC, BMY, BP, CSX, DISCA, DKS, FOXA, GE, KKR, KO, LLY, MBLY, MRK, PEP and PFE. He is long calls AAL, AAPL, BBY, BMY, C, COP, DAL, EBAY, EEM, EMC, F, GE, GS, HPQ, IMAX, LEN, MT, NEE, PFE, SYY, TEVA, TJX, UAL, UPS, VZ, WSM, XLF and ZIOP. Today he bought HPQ calls and ZIOP calls.
Steve Grasso is long AAPL, BAC, DD, DECK, EVGN, MJNA, PFE, T, TWTR and GDX. His firm is long ACI, DVN, AMD, FCX, AMZN, NE, NEM, OXY, RIG, TSE and VALE. His kids own EFG, EFA, EWJ, IJR and SPY.
Brian Kelly is long DXGE, BTC=, BBRY and U.S. dollar. He is short DAX, Australian dollar, Canadian dollar, euro, yen and yuan and WTI crude oil.
Guy Adami is long CELG, EXAS and INTC. Guy Adami's wife, Linda Snow, works at Merck.