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Crude oil held below $70, a key psychological level, on Tuesday.

The oil market bore the brunt of a major sell-off on Wall Street to begin the week with the spread of the Covid delta variant raising fears of a slowdown in the economic recovery. OPEC and its allies over the weekend also reached a deal to boost production.

In an interview with CNBC’s “Trading Nation,” Boris Schlossberg, managing director of FX strategy at BK Asset Management, said he is long energy. 

“Despite the volatility, I continue to like the sector, because I think this is just a hiccup,” he said on Monday. “Oil is definitely going to stay pretty much at these levels, perhaps even rise a little further as the economy begins to improve.”

Schlossberg has his eyes set on Halliburton, which reported earnings before Tuesday’s opening bell.

“That’s my favorite trade in the sector right now,” he said, pointing to the company’s exposure to the North American market and the strong margins from its fracking business.

Schlossberg also highlighted Halliburton’s venture into the cloud and artificial intelligence, which allows the company to use less capex and human capital to create revenue. He sees the stock jumping to $30 a share within 12 to 18 months. 

“All of these margins are really going to start to rise as long as oil stays at around these levels, doesn’t dip below $60,” he added. 

Shares in the oilfield services company jumped 5% on Tuesday after it reported earnings that beat street estimates by 3 cents a share. The company also posted its second straight quarterly profit.

Ari Wald, head of technical analysis at Oppenheimer, is steering clear of the group, though. He pitched a pairs trade that could work to take advantage of anymore downside in the space — go long the XME metals and mining ETF and short the XLE energy sector ETF.

“You’re at these crosscurrents [for the XME] … We still like it long term,” he said. “Energy just has a much poorer long-term structure.”

The XME ETF is up 20% this year, while the XLE has risen 26%.


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