You can tell the oil market's in rough shape when companies are drilling more to pull in smaller profits. This is the situation in which Halliburton (NYSE: HAL) finds itself, with lower energy prices pushing down the cash that comes through the door.

So, its revenue was up for the most recent quarter, but earnings were down. The $262 million that came to the bottom line is 61% lower than the profit for the same quarter the year before.

Offshore oil servicer Hornbeck Offshore (NYSE: HOS), first recommended on May 28, 2009 at a price of $27.08, twice within the past 60 days broke below the key, 50-day moving average.

Historically, that would be enough to re-evaluate the investment, but the stock did the re-valuation work on its own, recovering to the $27.08 entry point this month.

There are analysts and oil gurus who argue that $30 per barrel oil is possible if the U.S./global economic recoveries stall.

$30 oil? Don't count on it, which is why I'm Reiterating my Buy rating for Anadarko Petroleum Corp. (NYSE: APC), first recommended on May 14, 2009 at a price of $43.55.

It's a difficult call, but I'm Reiterating my Buy rating for Marathon Oil (NYSE: MRO), first recommended on April 20, 2009 at a price of $28.55.

Marathon's stock has meandered, largely due to reduced demand for Marathon's heavy/sour crude -- a negative trend that's likely to continue through at least mid-Q3.

In his Validea newsletter, editor John Reese picks stocks based on the long-standing strategies of "legendary" investors, including investment stars as Warren Buffett, Peter Lynch, and others known for long-term records of success.

Here, the advisor takes a look at Chevron (NYSE: CVX), based on the investment strategy of leading growth and value investor James O'Shaughnessy.

"O'Shaughnessy's approach, know as the Cornerstone Value Strategy, looks for large, well known companies whose market cap is greater than $1 billion. These companies exhibit solid and stable earnings. CVX's market cap passes this test.

Yesterday, Bank of America Merrill Lynch decided to up its rating on Anadarko Petroleum (NYSE: APC) to "buy" from "neutral" and raised the company's price target to $57 per share from $52 per share. The main reason for the upgrade was the company's success in raising $1.3 billion in a stock offering.

In my opinion, this is a rather bold move, mainly based on the target price for the stock. Perhaps the company does have a solid balance sheet, but it also faces some rather staunch resistance. The stock is hovering in the $41 region and is positioned beneath its 10-, 20-, and 50-unit weekly and monthly moving averages.

The interest in using natural gas as an alternative to crude has helped natural gas-based companies appreciate in value. Chesapeake Energy (NYSE: CHK) has benefited from that interest, with a gain of more than 20% this year.

CHK is an interesting story in that during the craze in energy prices in 2008, the CEO of the company was forced to liquidate his entire position. That forced selling created an opportunity to buy the stock at an incredibly cheap price, even beyond the artificially low energy prices reached earlier this year.

The China miracle is back on track, and with it comes speculation for resource demand as a result of huge economic growth. Within the oil sector, the coal group has seen big gains given its use in power generation. In China, that is particularly true, with the country seeing new power plants open on a regular basis.

Yanzhou Coal Mining (NYSE: YZC) appears to be in the sweet spot. Investors seem to agree and have pushed YZC up almost 70% in 2009. China is an appealing play, but by no means certain.

Drill, baby, drill was the calling card of the Republican Party during the last presidential election.

With high oil prices and rising demand, finding new sources of oil is imperative. Given environmental concerns, offshore drilling is one space that still offers meaningful potential to increase domestic supply.

Diamond Offshore Drilling (NYSE: DO) operates some 45 deep water rigs that are keeping extraordinarily busy with oil prices on the rise.

Suncor Energy (NYSE: SU) is a vertically-integrated oil company located in Canada. Unlike its vertically-integrated brethren in the United States, this Canadian stock is up more than 40% this year. By comparison, Exxon Mobil (NYSE: XOM) is down 13%, and ConocoPhillips (NYSE: COP) is down more than 20%.

The reason for the big difference in performance is the weakness in the dollar. That makes Canadian-based Suncor more valuable to investors.

McDermott International (NYSE: MDR) is a global oil engineering and construction company that specializes in offshore oil and gas construction and power generation systems.

Although more diversified than pure oil plays, McDermott has benefited greatly from the increase in price in crude.

The speculation is that McDermott will be quite busy with construction projects, as drillers are more active with the higher prices.

You have to love OPEC. It's not uncommon for the barons of the giant cartel to voice their interest in seeing oil at such-and-such a price.

Recently, OPEC reiterated its desire to see oil prices at $80 per barrel. This, they claim, is the price needed to spur additional investment in crude projects. Apparently, anything less will result in oil sitting idle in the ground.

"National Oilwell Varco (NYSE: NOV), a buy in our 'Wildcatters portfolio,' will see an outsized benefit from improving conditions in the global oil market," says Elliott Gue in The Energy Strategist.

"Rig technology is the crown jewel of National Oilwell's business; the unit builds key equipment used on land and offshore drilling rigs.

"The unit is currently benefiting from the boom in deepwater drilling activity -- one of the only drilling markets that continue to see growth.

"Equipment used on deepwater drilling rigs is far more complex and expensive than that used on land or shallow-water rigs. As a result, selling equipment into the deepwater market carries far higher profit margins for National.

Cheniere Energy (AMEX: LNG) builds liquefied natural gas terminals and natural gas pipelines. It is a smaller energy company that also participates in oil and gas exploration and development in the Gulf of Mexico.

Should oil continue on its current trajectory, demand for natural gas will increase at a greater rate. LNG suffered from increased competition from larger players that entered the space when oil prices were rocketing higher and a large amount of debt on its balance sheet. The credit crisis pushed shares to the brink, but retirement of certain notes in exchange for common stock reduces LNG's interest expense and provides liquidity for the foreseeable future.

Investors interested in foreign exposure to crude should consider China Petroleum and Chemical (NYSE: SNP).

Imagine the demand for crude for a nation whose economy is growing like a weed. The economies of the world may be receding, but China is still growing. More importantly, its government is investing heavily in making sure that growth continues.

Given that fossil fuel is so critical to any industrial society, owning China Petroleum makes a ton of sense. The stock is up almost 50% since bottoming in March, but there are more gains to be had.

I rate SNP a B or Buy.

Next up: Oil Stock #3.