(Schlumberger, oil service earnings story updated for trading action)

NEW YORK ( TheStreet) -- Fourth-quarter results from Schlumberger ( SLB) set a positive tone for the oil service stock sector, but the earnings trade for the sector remains uncertain.

Schlumberger shares opened up on Friday, and shares of Halliburton ( HAL), Baker-Hughes ( BHI) and Weatherford International ( WFT) were also all up by at least 1%, but the gains quickly narrowed and by mid-morning, Schlumberger was in the red..

The oil-service stocks had recently attained, and then given back, 52-week high levels, so the early Friday trade could have merely been an attempted relief rally back to the previous 52-week high levels, or event-driven traders waiting for the opportune moment to book profits, letting the stocks run up on the headline for a few moments before exiting at the optimal profit point.

Many analysts maintain that there is another leg up in the oil-service stocks levered to a cyclical story. Additionally, one of the biggest fears headed into the oil-service stock earnings was that investors would repeat last quarter's trade of selling off the stocks, even after strong earnings. Schlumberger was down by 1% by mid-morning on Friday, and the big early gain was erased, but it wasn't a big selloff either.

If there is going to be another leg up in oil-service shares, Schlumberger share trading on Friday morning wasn't looking like it would provide an answer to the question. If anything, the lack of any big sell on the news in the oil service shares on Friday morning was, in light of last quarter's earnings reaction, a modest positive, but the the fizzle after the big open for the stocks suggested that a broadly optimistic tone from management in upcoming earnings -- Halliburton reports on Monday -- may not be enough to push the stocks higher.

Schlumberger posted revenue in the fourth quarter above $9 billion, and ahead of the Street consensus of $8.8 billion. Earnings per share of 85 cents was ahead of the Street consensus of 77 cents.

Arguably more important than the backward looking numbers was the outlook from Schlumberger, and the commentary on activity outside North America. It wasn't very specific, but it was roundly positive.

Schlumberger noted that outside North America, activity improvements in the North Sea, West Africa, and several Middle East & Asia GeoMarkets, coupled with strong year-end product sales particularly for software, "more than offset" continued weakness in Mexico and seasonal activity decline in Russia.

Schlumberger noted that the consensus forecast for demand in 2011 shows a further healthy increase. "Oil prices have moved into a range that will encourage increased investment, particularly in exploration.... While we do not anticipate a return to pre-Macondo activity levels in deepwater U.S. Gulf of Mexico in 2011, we do expect a marked increase in deepwater activity in the rest of the world. These factors, coupled with increases in development activity and production enhancement in many other areas, promise stronger growth rates as the year unfolds," Schlumberger wrote.

If you liked this article you might like

Energy Takes a Backseat as Crude Oil Stabilizes Under $50

Everyone Needs Significant Exposure to Defense Stocks: Market Recon

Lockheed Martin, Raytheon, Activision Blizzard: 'Mad Money' Lightning Round

Shrug Off The Apple-FANG Bite: Cramer's 'Mad Money' Recap (Thur 9/14/17)