Market Insider

Energy stocks are riding the crude oil wave and lifting the S&P 500

A Chesapeake Energy drill site in Bradford County, Pennsylvania.
Daniel Acker | Bloomberg | Getty Images

The energy sector had a nice day on Tuesday.

The Energy Select Sector SPDR ETF (XLE) traded ended the day up 2.88 percent Tuesday, with Chesapeake rising 10.6 percent to lead advancers. Energy stocks were also some of the best performers in the S&P 500.

The ETF posted its best day since Nov. 7, as oil prices surged on renewed hope that OPEC would strike a deal to cut production later this month.

"While there is no question that the market's fundamentals remain precarious, we see the latest decline as overdone and a reason to believe the market is forcing OPEC to strike a deal at the end of this month," Peter Cardillo, chief market economist, said in a Tuesday note to clients.

Energy stocks had been under pressure when oil prices were declining. Crude hit multi-month lows on Monday on concerns that the oil cartel would fail to come to an agreement on production.

XLE 5-day chart

Source: FactSet