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How to best play the oil rally — and it’s not by buying WTI or Brent

Oil prices have jumped to three-year peaks, as speculative bets hit all-time highs and a record-setting U.S. winter helps boost demand.

If you had bought oil three months ago, you would have bagged a profit of roughly 25% at this point, scoring yourself one of the biggest returns in the financial markets (apart from the monster rallies in cryptocurrencies, of course).

Is it too late to jump on the oil bandwagon? There is still a way to score gains, if you just know where to look, according to strategists at J.P. Morgan.

“Oil scratching $70 a barrel is perhaps a more interesting milestone than new highs on stocks,” they said in a note dated Friday, referring to Brent’s recent high.

Prices can stay high in this year’s first half, and energy stocks are “the only proxy that still trades cheap to current or even longer-dated oil futures,” they wrote.

“Equities stand out as cheap by 10-15% for the S&P Energy, 5-10% for MSCI Energy and 10% for MSCI Russia,” the analysts added, implying a rally.