The need for oil drilling services will continue even if the price of oil declines, according to Richard Lehmann. Here, in his The ETF Investor, he looks at a favorite way for investors to play this trend.

"Oil prices have a triple or quadruple price boost associated with them. The first is supply/demand dynamics, the second is the weak dollar, the third is speculative fervor and the fourth inflation fears.

"A pundit said that last year it took 65 Euros to buy a barrel of oil and today it still takes 65 Euros to buy a barrel of oil. This illustrates the effect the weak dollar is having on U.S. prices and the international price of oil.

"Inflation protection used to be the province of gold, but now it seems oil is serving a similar function. We think the current oil bubble has not run its course.

"One of our past recommendations, the Oil Service Holders Trust (NYSE: OIH), was first suggested in February 2006 at a price of $101.50. We recommended it again in December 2007 at a price of $179.83.

After yesterday's sharp rise in oil prices, we are seeing the market stepping back a bit today as this week's Energy Information Administration inventory report shows growing inventories.

As we discussed yesterday, the cold wintry weather which has finally taken hold across most of America had oil traders betting on a strong oil market over the upcoming weeks. We have seen oil make a nice bounce from its lows earlier this month when it was trading down around the $50 a barrel mark; yesterday we saw prices trading over $57 for a short period.

Today we get a little snap back into reality with an inventory report that shows oil inventories climbed 2.7 million barrels last week. Analyst's had been expecting to see about a 1.1 million barrel increase and this has put some pressure on the precious crude.

Currently oil has fallen $0.91 to $56.06 but all the major oil stocks are at this point doing alright so far in the today's trading. As of 10:55 this morning:

• ExxonMobil Corporation (NYSE: XOM) is trading up 0.2% to $74.52 up $0.13.
  
• Chevron Corporation (NYSE: CVX) is currently trading at 72.92 falling a slight 0.2% down $0.15.
  
• Valero Energy Corp. (NYSE: VLO) is trading at $54.05 gaining 0.4% or $0.21.
  
• BP p.l.s. ADR (NYSE: BP) is getting hit the hardest with the stock falling 0.9% to $63.04 down $0.55.
  
• Oil Service Holders Trust (NYSE: OIH) has put up the best day with a 1.1% rise to $136.89 up $1.51.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.

It was a tough day across the board for oil stocks. Falling oil prices and several industry downgrades pushed stocks down hard in today's trading session.

Oil has been falling sharply over the last month since briefly passing over the $80 barrier during the Lebanese / Hezbollah conflict back in July. Today oil continued its downward spiral and currently the precious crude is trading at $67.50 a barrel. There are a lot of reasons why oil has been on the slide lately, but mainly it comes down to supply and demand. Well lately we have seen that the supply / demand picture is not quite as fragile as analyst's had been thinking. Inventories have actually been on the rise lately but I doubt anyone has been expecting to see crude oil sliding down towards the mid $60's so quickly.

Another key reason as to why oil has been falling has been the lack of any major hurricanes this season. Around the middle of the summer all we were hearing about was how this hurricane season was going to be a tough one, and possibly even worse than what we experienced last summer, and that just hasn't turned out to be the case. Not only have we yet to experience any major storms, weather experts have now reversed their opinions and are calling for a very weak season ahead of us. While that is encouraging news for the country, it has hit oil stocks pretty hard. It wasn't too long ago that most stocks were approaching or setting new highs, and now it feels like the rug has been pulled out from under us.