Though oil producers usually benefit the quickest from the rising price of oil, oil service companies are usually not far behind. These companies engage in activities regarding the exploration, development, and management of oil production but they do not usually engage in the actual production themselves. They may provide equipment such as deep water drilling rigs or they might offer testing services used during the exploration or drilling process.
Some oil services stocks represent shares in an oil service company, while others are actually exchange traded funds (ETFs) that focus on the oil services sector. Some analysts predict a current uptrend in these stocks that will last for at least several weeks. Knowing which stocks to watch and consider is helpful for any investor wanting to take advantage of this potential positive trend.
One ETF that tracks the oils services industry and recently broke out is the Oil Services HOLDRs ETF. Schlumberger Limited, the largest oil service company in the world, has almost mirror image performance compared to this ETF and is poised for an upward trend. Industry giant Halliburton has seen a 40 percent increase in share price since a low in June 2010. This company is a standard name in the oil services sector so stability should not be a concern.
Transocean, recently in the news for being the owner of the Deepwater Horizon rig that exploded in the Gulf of Mexico, is a stock to watch. If the price increases to over $55 per share, it might be one to buy. Stocks poised to break out and representing other industry-related services are Core Laboratories, Newpark Resources, Inc., and Superior Well Services Inc.
These are just a few oil services stocks to watch in the coming days and their shares are currently trading at various price points. Investors should consider adding these stocks to their portfolios to take advantage of rising oil prices. Shares of service companies that own deepwater drilling rigs are in particular demand due to the limited number of rigs available.