Two ETFs Riding Oil’s Surge Toward $150: XLE and PEO Stand Out in April 2026

WTI crude oil has crossed $104 per barrel, its highest level in the past 12 months, after a conflict between the U.S., Israel, and Iran that began February 28, 2026 shut down parts of the Strait of Hormuz. The price has nearly doubled from its December 2025 low of $55, and analysts at Societe Generale have warned that further supply disruption could push prices toward $150 per barrel in April. Two vehicles stand out for investors watching this theme: a passive index ETF and an actively managed closed-end fund.

Two Very Different Bets on the Same Commodity

Energy Select Sector SPDR Fund (NYSEARCA:XLE) holds 99.2% of its portfolio in energy stocks, with $37.9 billion in net assets and an expense ratio of just 8 basis points. The fund tracks the S&P 500 energy sector, so its returns are driven almost entirely by the largest U.S. energy companies. Exxon Mobil and Chevron together represent about 40% of the fund, making XLE essentially a concentrated bet on two mega-cap oil companies plus a tail of smaller producers and midstream operators.

Adams Natural Resources Fund (NYSE:PEO) takes a different approach. Founded in 1929, it is a closed-end fund that actively manages a portfolio of energy and natural resources stocks. It holds 55 positions and charges an expense ratio of 0.62%, well below the closed-end fund industry average. Its top holdings mirror XLE’s, anchored by Exxon, Chevron, and ConocoPhillips, but it also allocates to chemicals, metals, and materials.

How Each Fund Actually Makes Money

XLE’s return engine is straightforward: when oil prices rise, integrated oil majors generate more free cash flow, pay larger dividends, and buy back more stock. XLE passes those dividends to shareholders quarterly. The fund has delivered a 33% year-to-date return as oil has surged, and its one-year gain stands near 30%. Over five years, the fund is up 183%.

PEO adds active management and a formal distribution policy, committing to pay out at least 8% of NAV annually, which it has delivered for 91 consecutive years. In 2025, it paid $2.05 per share in total distributions and posted a 9.4% total return on NAV, slightly ahead of its 9.1% benchmark. Year-to-date, PEO has returned roughly 24% on NAV, and its price has risen nearly 25% year-to-date.

The Closed-End Fund Discount: Risk or Opportunity?

PEO trades at a roughly 13% discount to its NAV. Unlike standard ETFs, closed-end fund shares trade at whatever price the market sets, not at underlying asset value. That discount can widen during market stress, amplifying losses beyond what the holdings justify, or narrow and provide a bonus return if sentiment improves. Activist investor Saba Capital has recently built a 8.3% stake in PEO, which some investors read as a catalyst for closing that discount, though there is no guarantee.

XLE carries no such structural quirk. Its market price stays tightly linked to its NAV through the creation and redemption mechanism. What it does carry is concentration risk. One article from March 2026 noted that despite oil surging on Iran-Israel tensions, XLE barely moved, as investors priced geopolitically driven spikes as temporary rather than durable. Energy companies have restructured to generate strong cash flow even at lower prices, meaning XLE’s performance may lag the raw commodity in a spike scenario.

Where Each Fund Fits in a Real Portfolio

XLE suits investors who want direct, low-cost energy sector exposure with no structural complications. Its 2.7% dividend yield is modest, but its liquidity and simplicity make it the cleaner tactical vehicle for riding an oil price cycle. The fund fell nearly 4% in just the past week, a reminder that commodity-driven rallies can unwind quickly.

PEO suits income-focused investors who want energy exposure bundled with a high, predictable distribution. The 8.4% annual distribution rate and 91-year dividend track record are genuinely rare. But the discount to NAV adds complexity, and the broader natural resources mandate means PEO will not track oil prices as precisely as XLE during a commodity spike. Investors comfortable with the closed-end fund structure may find PEO’s persistent NAV discount and long distribution history worth examining for income-focused portfolios.