Energy stocks and the Energy Select Sector SPDR (NYSEArca: XLE), the largest equity-based energy exchange traded fund, are in rally mode. For its part, XLE is up nearly 7% over the past week, indicating that the fund is taking advantage of some favorable seasonality for the energy sector.

XLE tracks 32 energy companies from within the S&P 500 Index. Top holdings include well-known names such as Exxon Mobil (XOM), Chevron Corp (CVX), and ConocoPhilips (COP). On a technical basis, XLE is looking more attractive.

After conquering its 50-day moving average, “XLE then continued on its tear in the following session by taking out both its 80-day moving average and the $70 level (a psychologically significant round number that marked the Feb. 27 intraday high, and also represents a 50% retracement of XLE’s rally from its Aug. 21 closing low to its Jan. 22 closing high),” according to Schaeffer’s Investment Research.

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Over the past 10 years, no sector is as correlated to inflation as is energy and the competition is not even close, according to S&P Dow Jones data.

Declining prices in recent years have prompted scores of major oil producers to rein in capital spending. Technological improvements and greater efficiency has helped U.S. shale producers pump out crude oil at lower margins – some say it is now profitable at less than $50 per barrel. Additionally, companies are finding easy access to credit and private-equity firms have bought out struggling companies, which have kept production flowing.

Related: Energy ETFs: More Participation in Oil’s Upside?

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