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Here’s how to trade Saudi Arabia’s preferred $50 to $60 range for oil

Crude oil and water pour from a well head at an oil field.
Jeyhun Abdulla | Bloomberg | Getty Images
Crude oil and water pour from a well head at an oil field.

Oil prices pulled further away from the $50 level Wednesday with both the WTI and Brent benchmarks jumping to around $52 a barrel.

This is just how Saudi Arabia wants it.

Officials from the kingdom and other OPEC countries said this week that a $50 to $60 price is the preferred range for oil in order for the organization to provide adequate global supply.

There's one ETF in particular that could be a winning trade if the Saudis get their way…


Using Kensho, we looked at which ETFs do well when oil traded within a $50 to $60 band over the last decade.

Here's what we found...


The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) is the best performer among energy sector-related funds. The ETF, which counts companies like Whiting Petroleum, Anadarko Petroleum and RSP Permian among its largest holdings, likely does well because many traders have said (even before the Saudis) that $50 a barrel is the point when exploration would become profitable again. Below that, there is not much incentive to find more crude.

It's worth noting that consumer stocks are still able to post gains at these levels, which are likely still not high enough to lead to surging gasoline prices at the pump.


Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.