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Simply put, no one wants any part of oil or oil equities in this market environment. It's just one day, but Wednesday's action proves as much. NYMEX-traded crude for July delivery fell $2.94, or 3.2%, to settle at $87.82 a barrel. That's the lowest closing price since October. In London, Brent crude dropped $3.21, or 3%, to finish the day at $103.47 a barrel. That's the lowest settlement for Brent, the global benchmark, since December.

On the same day, Exxon Mobil (NYSE:XOM), the largest U.S. oil company, saw $10 billion in market value evaporate. The shares of other domestic and foreign oil companies are getting hammered as well. Anadarko Petroleum (NYSE:APC) is off 15% in the past month while BP (NYSE:BP), Europe's second-largest oil company, is down 14% over the same time.

Oil services stocks have been far from immune. The likes of Schlumberger (NYSE:SLB), Halliburton (NYSE:HAL), National Oilwell Varco (NYSE:NOV) and their peers are intimately correlated to the price of oil, far more so than even integrated names such as Exxon and Chevron (NYSE:CVX). That's great when oil is moving higher, but it's a significant handicap in the current market setting.

And it explains why the Market Vectors Oil Services ETF (NYSEARCA:OIH), the largest oil services ETF, has tumbled almost 12% in the past month. OIH is excessively exposed to Schlumberger, the world's largest provider of oilfield services, as that stock accounts for over 20% of the ETF's weight. NOV and Halliburton combine for another 19%, meaning that trio really moves OIH.

However, the excessive weights of just three stocks haven't insulated OIH from the ills of some of its other constituents. For example, Transocean (NYSE:RIG), the world's largest provider of offshore drilling services, has plunged 18% in the past month. The stock is OIH's sixth largest holding.

Drilling down on the charts of OIH's top-six holdings, all except SeaDrill (NYSE:SDRL) are trading below their 200-day moving averages, and Baker Hughes (NYSE:BHI) and Transocean are flirting with their 52-week lows.

Beyond the technicals, the fundamentals for oil services stocks are lackluster at the moment. U.S. oil demand sank to a 15-year low in the first quarter, but inventories are at a 22-year high, indicating demand is just not where it should be at this point in an alleged economic recovery. Europe's sovereign debt calamity and China's slowing economy are also pressuring oil demand. Slack demand means reduced need for the parts, rigs and services purveyed by OIH constituents.

While it's fair to say many of OIH's holdings, particularly the top three, are well-run, have strong balance sheets and bright futures, there's no getting around the fact that down is probably the path of least resistance for this ETF in the near-term.

Source: Oil Slicked