Service Stocks: They Were Telling You That an Oil Spike was Coming – Fat Tail Daily

I’m revisiting a piece I wrote in January 2026:

“Following the Smart Money: Service Stocks Lead the Way.”

The reason for that: we were looking at a beaten-down sector and doubling down on our conviction on why it could be close to a turning point.

But even more specifically, we were looking at oil and gas service companies.

As I said in January:

“In terms of a potential recovery in the oil and gas market, we’re locked and loaded for 2026!”

Now, that all sounds easy in hindsight, given the recent war in Iran and surging energy prices, but here’s the thing…

At the time of writing that piece, underlying oil and gas prices were extremely weak. This is how the benchmark WTI Crude Oil price looked back then:

Source: Trading Economics

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Crude oil traded below $60 per barrel and was stuck in a multi-year bear market.

So, why did we move on Oil and Gas?

As I said in January, there were several key reasons to look closely at this sector…

While the underlying oil price was weak, a certain group in that sector was showing strong upward momentum.

Despite lacklustre crude prices, many US oil and gas SERVICE companies were beginning to display positive price action.

In the January update, I explained why that matters and how you can take advantage:

In the resource market, service stocks are often early-cycle movers, offering a bellwether for investors that could signal a strengthening market.

Rising activity feeds into the service companies’ revenues, which may be one reason why these stocks tend to rise early in the cycle.

One way to capitalise on that could be an ETF focused on oil and gas service stocks.

Here’s one example that could be worth a look: The VanEck Oil Services ETF [NYSE: OIH]:

Source: Trading View

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Note how this chart is evolving into a healthy setup…

A sequence of higher lows, with prices accumulating into a stronger uptrend. This is the type of set-up that excites me as an investor.

The VanEck Oil Services ETF is now up over 40% year-to-date and has been one of the best-performing ETFs globally this year.

One of the few success stories in other wise depressed market.

The bottom line: you need to think and act differently from the mainstream herd. And the best way to do that is to use price action as your leading indicator of a potential market turn.

If those are the types of insights you’re looking for, I suggest checking out a special series I recently recorded with my two colleagues.

Detailing the unfolding crisis in the Middle East and how this could be bullish for certain commodities in 2026.

I’m not talking about energy, but rather something much different.

You can check that out here.

Until next time.