July 23, 2009 (FinancialWire) — Dr. Joe Duarte (http://www.joe-duarte.com) recently noted: The Oil Service HOLDRS Trust (NYSE: OIH) is outperforming the U.S. Oil Fund (NYSE: USO), a sign that at some point oil may move higher.

Duarte added: OIH is up nearly 20% from its recent bottom, while USO is only 10%. That 2 to 1 margin is significant for two reasons. One is obvious. It’s been better to own the oil service stocks than to own oil futures over the last few weeks. Second, if the energy markets roll over, the pain may be greater if you own OIH.

That means that it’s time to watch the action in OIH carefully, especially after the recent discrepancy between the EIA and API oil supply data sets. The API data, released Tuesday afternoon, after the market closed, showed a surprise rise in oil inventories last week. The EIA data showed the opposite with a small drawdown in crude supplies. The key part of the report seemed to be the rise in gasoline and distillate inventories and the pullback in refinery utilization.

What it means is that the situation is in flux, due to seasonal factors. This is the time of year when refineries switch their operations to produce more heating oil than gasoline. The difference from past years, though, is that as refiners prepare for colder temperatures, they are starting with a fair amount of heating oil. That could lead to lower prices, especially if there is a warmer than expected winter.

Duarte’s conclusion: For now, if you have to invest in oil, OIH is a good vehicle, as long as it continues to show relative strength.

Make sense of today’s nonsense. Get Doctor Joe Duarte’s Market I.Q., at:

http://www.joe-duarte.com/free/order_choices.asp and subscribe to www.joe-duarte.com, for its daily energy review and stock picks.

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Duarte partners with the Investors Resource Center at Investrend Information (http://www.investrendinformation.com).

Duarte’s IntelligentForecasts.com (http://www.intelligentforecasts.com) provides free news coverage and analysis, and his daily articles and news summaries offer recommendations and analysis for ETFs, and individual stocks in the technology, health and biotechnology, and energy sectors. Duarte has combined expertise in health care, energy, and the effects of politics and global intelligence on the financial markets offer a unique blend of insight and information to thousands of active investors and political and intelligence aficionados around the world on a daily basis.

He is the author of: Futures And Options For Dummies, Successful Energy Sector Investing, Successful Biotech Investing and co-author of After-Hours Trading Made Easy. In early 2001, in Successful Energy Sector Investing, he correctly predicted that Venezuela’s political problems could lead to an energy crisis in the United States. He has also appeared as a weekly guest on Market Mavens Radio and has logged appearances on KNX radio in Los Angeles, Financial Sense.com radio, and Wall Street Radio.

One of CNBC’s original Market Mavens, Dr. Duarte has been writing about the financial markets since 1990. His articles and commentary have been featured on CBS Marketwatch, Barron’s, Smart Money, Medical Economics, and in Technical Analysis of Stocks and Commodities magazines. In 2003, Doctor Duarte received second place, in the professional section, of the Medical Economics Investment Challenge with a 12-month return of 42%.

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