From what I understand, oil is used as it is a "depot" injection, which needs time for the body to
slowly break down the carrier, and then start to cleave the hormone from its ester. Water breaks down very quickly, which could lead to a painful injection as the hormone would not have started to begin the process of metabolization fully. As test suspension has a half-life of about 4 hours, water can be used as a carrier as the hormone does not have an ester to cleave; allowing for the body to start the process faster.
Of course, this is my limited understanding of the topic and I freely encourage posters that may have better insight to challenge and educate me on this.