It seems we're nowhere near the top of the market for the OIH oil service ETF.

The International Energy Agency is anticipating worst-to-date worldwide reserve numbers, with investment requirements beyond what major players have on hand.

IEA head Nobuo Tanaka said Thursday that the Paris-based organization will soon provide a "more realistic supply potential" appraisal...

That tells us what we've heard to this point may as well be thrown out the window.

It's a data shake-up that will reverberate for years, not just in speculators' ears but with real fundamental sticklers too.

You see, instead of demand-side tunnel vision, the IEA is finally turning its eyes to what matters—what's underground.

The agency is probing the world's 400 leading oil fields, and no one on the NYMEX is expecting rosy data when the tally comes in.

IEA chief economist Fatih Birol says, "the oil investments required may be much, much higher than what people assume."

"This is a dangerous situation," the lead number-cruncher continues.

But if you're an energy ETF investor, that danger is pretty darn profitable.

Energy ETF Investments Shine

Now, many long-term marketeers get out of a play after a loss of 8% or so, and they're careful not to buy into raging bullish charts.

But Investor's Business Daily's ETF rankings these days are full of winning oil, natural gas, and commodity stocks that are appetizing buys despite their recent run-up.

United States Natural Gas Fund (AMEX:UNG) is up more than 54% on the year through May 22, and PowerShares DB Oil (DBO) has gained 43% in the same time.

Normal IBD logic would say you should observe these tickers from afar and bang your desk in frustration for not having bought in December.

We say it's time to get in.

The reason, quite simply, is chaos.

Where supply and demand should stand alone as factors for weighing investment prospects, the oil industry keeps adding wild cards.

Sure, there's the risk premium added to a straight barrel of light, sweet crude coming out of the ground in places like Nigeria and Iraq.

But the IEA statistical shuffle that's now in the works tells us something far scarier than pipeline blasts or widespread siphoning—even reserves in the safest places are in question.

The numbers just aren't reliable, because the IEA and others have adopted a backwards model where price is extrapolated from demand in top economies, not supply.

Supply, it turns out, is connected to decline rates that lie between 4% and 10% a year. 4.5% is what Cambridge Energy Research Associates estimates, but if Fatih Birol's gloomy tone rings true later this year, who knows what kind of supply drops we'll find out about?

Again, that uncertainty and the fact that oil futures are the textbook example of leading indicators means the only way is up.

There is no countervailing momentum now to counteract a rise, other than politicized pot-shots (suing OPEC while nixing gas taxes and drilling in Alaska may be the perfect storm of foolishness).

You know what, though? Despite or maybe because of all the uncertainty, I am sure about one thing—the bleaker the situation looks for oil junkies, the better oil service companies will do.

That's why I'm super-bullish on oil field services companies, the cowboys who are going to the farthest-flung places and using the newest technologies...

And charging higher and higher prices, because they can.

Buy Oil Services HOLDRs on Dips

When's the last time you heard about an analyst boosting 36 companies at once?

Tuesday, that's exactly what happened.

James Crandell over at Lehman Brothers is overweight Transocean Inc. (NYSE:RIG), raising his price target on that oil service and drilling giant by nearly 7%...

That's even after a 75% climb since last spring.

Being the international market watcher over here at Energy and Capital, I'll tell you that even though the wells may be dryer and harder to reach, there's no shortage of work in the pipeline for Transocean.

Same goes for other top players like Schlumberger (NYSE:SLB), Halliburton (NYSE:HAL), and Baker Hughes (NYSE:BHI).

And they're all neatly packaged for you in the Oil Service HOLDRs ETF (AMEX:OIH), which pulled back slightly on Thursday but has room to run.

OIH is a little rich for some people's blood at over $200 per share currently, but consider what you get—a direct tap into the oil industry's last, best hope for capacity increases to offset dwindling production.

I guarantee you don't want to wait for the final IEA numbers later this year to make your move.

Buy OIH anywhere below $215 per ETF unit.

Regards,

Sam Hopkins

"Energy stocks... The only way a human is going to make any money."

-- Matt Simmons, Peak Oil's first and most vocal proponent,
and founder of the country's last pure play energy investment banking firm.

Follow the money trail. Sign up for Energy and Capital now.