The popular and volatile SPDR S&P Oil & Gas Exploration & Production ETF (XOP) , the largest ETF focusing on exploration and production companies, has had its moments this year, but with some seasonal factors ready to kick in, investors should be mindful of the often intimate correlations XOP and comparable ETFs have to oil prices.

Crude oil prices have been rallying as investors anticipated oil producers will take action to rein in the ongoing supply glut after Saudi Energy Minister Khalid al-Falih said the kingdom would work with other major producers to stabilize markets, reports Libby George for Reuters.

SEE MORE: OPEC Output Freeze Speculation Lift Oil, Energy ETFs

Plenty of skeptics remain regarding oil’s fundamental outlook. There might be something to that skepticism as many of the world’s major ex-U.S. producers of oil have not displayed a willingness to pare production. Even the output reductions in the U.S. have been modest. The good news is U.S. shale output is slightly declining, but challenges remain on the output front from OPEC producers.

Other ETFs with exploration and production exposure include the PowerShares Dynamic Energy Exploration & Production Portfolio (PXE) and the Guggenheim S&P Equal Weight Energy ETF (RYE) .

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“XOP gives investors exposure to around 60 exploration and production companies, refiners and oil majors, though the ETF is heavily weighted toward pure-play oil and gas producers. In fact, E&P companies that get nearly all of their revenues from sale of hydrocarbons,” according to a Seeking Alpha analysis of the ETF.

Mmany traders remain bearish over the short-term, betting on weakening seasonal trends. Money managers increased wagers on declines in oil prices to a record on increasing U.S. inventories and ahead of a seasonal refinery maintenance that will curb crude demand – futures have dipped in each of the past five Septembers, reports Mark Shenk for Bloomberg.

SEE MORE: ETF Ideas for Profiting from a Pullback in Oil Stocks

The Direxion Daily S&P Oil & Gas Exploration & Production Bear Shares (DRIP) takes the -3x, or -300%, daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index, the same index tracked by XOP.

XOP’s near-term outlook revolves around production cuts and whether those cuts arrive or not.

“If the major oil producers fail to reach an agreement next month, or if Saudi Arabia spooks the market by saying that it will continue pumping close to record quantities of oil, then it could drag oil prices. The increase in oil prices we’ve seen this month could evaporate in September,” adds Seeking Alpha.

For more information on Energy ETFs, visit our Energy category .

SPDR S&P Oil & Gas Exploration & Production ETF

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.