Some pretty savvy energy professionals have been predicting oil prices will skid to the $30-a-barrel level following their sharp rise to the mid-$50s in October. After oil’s recent slump to $41, their forecast was looking pretty good. Not so, though, after last week’s snazzy 14% rebound to $46.28, in part fueled by renewed fears of supply disruptions and Osama bin Laden’s new call to his followers to attack oil facilities, which they’ve been doing.

In turn, some energy investors are understandably bewildered. One of them is reader Joseph DeGrazzi, whose only stock holding, ConocoPhillips, the country’s third largest integrated oil company, is up about 23.5% in this year’s erratic stock market.

Like many other energy investors, he doesn’t know whether he should hold or sell following a year in which energy stocks, fired up by ballooning oil prices, are running rings around the market with roughly 15% to 25% gains.

Mr. DeGrazzi spelled out his concerns in an e-mail he just sent me which read: “Dear Dan, I have a nice profit in Conoco, which I bought last year in the low 60s. Lately, though, oil prices have come down and so has the price of my Conoco. I am inclined to hold on, but my broker says I should take my profit and run. What’s your take?”

Joe, judging from what I hear, your broker may be giving you bum advice, although no one can fault you for nailing down at least a 30% profit. Also, you’re not the only worrywart, what with many energy stocks having recently retreated from their highs in the face of oil’s 24% drop to its recent $41 low from its October peak. This drop, of course, suggests lower oil company earnings in 2005 than in 2004, although OPEC recently announced a production cutback of a million barrels a day that could help temper the price slide.

While many pros, such as investment strategist Bill Rhodes of Boston-based Rhodes Analytics, view oil as overpriced relative to other commodities and see the prospects of a further drop to the mid-$30s, there is the question of possible sabotage of oil facilities and supply disruptions, which would result in an immediate spike in oil prices.

In other words, the message is that no one really knows where the price of oil is headed near term, and don’t try to figure it out without first speaking to your local terrorist.

Energy tracker Michael Mayer of Prudential Securities is telling clients the major oil stocks remain attractive but are vulnerable to a further drop in oil prices. Based on the current supply/demand balance and absent any risk premium, he figures oil warrants a price of $30-$35 a barrel. The risk premium, which in October was estimated at $12-$15 a barrel, is now thought by Mr. Rhodes to be in the $8-$10 range.

As for Conoco, it might be more vulnerable than most oil stocks because of its sharp rise. (It closed last year at $66.57 and finished Friday at $86.99.) Still, several pros like the stock and see it as more of a buy than a sale.

Mr. Mayer, for example, views it as his favorite, the only integrated oil he would overweight in a portfolio. His target price: $99,boosted recently from $96. He notes that Conoco trades at only 6.7 times normal cash flow, a 31% discount to the average of the super major oil companies.

Morgan Stanley’s oil analyst, Douglas Terreson, is another bull. With the company’s major integration behind it, he figures it should continue to perform well. His target: $107.

Another pro who likes the stock is Richard Moroney, research director of the weekly newsletter Dow Theory Forecasts. “Conoco shares still have plenty of energy,” he said. It’s also his top pick among the integrated oils. Given strong oil demand and no new supply, Mr. Moroney contends Conoco – an outgrowth of the 2002 merger of Conoco and Phillips Petroleum – would still be attractive even if the price of oil were to drop to $30 a barrel.

He’s quick to point out that Conoco’s earnings will likely drop next year to an estimated $9.54 a share from a projected $10.97 this year. He notes, though, that the company has used its asset sales and cash flow to diversify its portfolio and strengthen its balance sheet, positioning itself for solid long-term growth.

Another enticement is Conoco’s acquisition of a 7.6% stake in a big Russian oil company, Lukoil. It has an option to hike its stake to 20%.Likewise, Conoco, which is generating $4.4 billion in operating cash flow and has increased its cash balance to $3.3 billion, raised its quarterly dividend in September by 16% to 50 cents a share. Given the company’s cash horde, Mr. Moroney figures there’s plenty of room to raise the dividend still further. Short-term money may be coming out of energy stocks, observes Mr. Moroney, but he thinks that’s a mistake in the case of Conoco, which he rates a solid long-term buy. Looking out 12 to 18 months, he sees the stock trading between $105 and $110.