The recent spike in oil prices not only gave the energy sector the boost it badly needed, but also had a significant positive impact on the broader markets. After dipping to levels not seen in over 10 years in the first half of February, both WTI and Brent crude have now surged over 40%. While WTI crude hit its highest settlement since Dec 24 on Monday, Brent crude registered the same since Dec 4. Banking on this impressive rally, the broader energy index – Energy Select Sector SPDR (XLE – ETF report) – saw the fifth straight session of gains for the first time since Oct 2015.

Most of the benchmarks made up for a large part of their losses on this rebound. Even energy mutual funds felt the same positive vibes after enduring a rough patch for over a year. All the energy equity mutual funds tracked by Morningstar finished in the green in the trailing one-month period.

So, investors interested in deriving significant returns from the ongoing crude rally may consider adding mutual funds from this space to their portfolio.

Before we suggest the mutual funds that one should invest in now, let’s take a look at the driving factors:

Possibility of a Production Cut

Rising possibilities of a freeze on crude production following comments from the major oil producers was one of the main catalysts to the oil price rebound. The United Arab Emirates’ energy minister Suhail bin Mohammedal-Mazrouei said on Monday that “it doesn’t make any sense for anyone to increase the production with the current prices.” While talking about price control, he said: “We need to be patient. It’s not happening in weeks or months. Correcting to a sustainable price will take time.” Also, Ecuador’s Foreign Minister Guillaume Long said that a meeting will be hosted by the country on Friday in Quito with Venezuela, Ecuador, Mexico and Colombia, “to reach [a] consensus over oil, especially prices.”

Additionally, the U.S. Energy Information Administration (EIA) reported that total crude production for the week ending Feb 26 declined by 25,000 to 9.077 million barrels per day (bpd) and gasoline output decreased by 674,000 bpd to nearly 9.3 million bpd. Moreover, the EIA projected that oil production in seven major shale-drilling regions in the U.S. is expected to decline for the sixth straight month in April. Also, the EIA expects production to decline by 106,000 bpd to 4.87 million bpd in April from March. Also, the Organization of Petroleum Exporting Countries or OPEC reportedly lowered output by 79,000 barrels to 33.06 million bpd in February.