It’s practically a replay of a horror film where at the end the monster is finally destroyed. In Wall Street’s case, the monster – a spiraling oil price – is not nearly as frightening as it was a couple of months ago. Indicative of this is the recent slide in oil from about $55 to $47 a barrel, which, in turn, has spurred speculation that the worst is over on the oil front and that a further drop to the low-to-mid $30s may be just around the corner.

Speculation of an end of the oil scare, though viewed by some energy experts as naive, is nonetheless understandable in light of the recent 15% skid in the oil price, which has been accompanied by a jump in stock prices. As we all know, market ogres – such as international political upheavals, assassinations, rising interest rates, and a slowing economy – come and go. And that seems to be a growing view of the latest market ogre – the surging price of oil.

We all know the chief reasons for the ballooning price, namely the threat of shortages stemming from terrorist activity and supply disruptions (both from the Middle East and Russia) and about a $12-$15-a-barrel fear premium that’s built into the current price.

There are also the energy conspiracy theories linked to the rising price; some oil experts give them credence, while others believe they’re pure fantasy. In this context, billionaire Bushhater George Soros is claimed to have used his hedge funds to drive up the oil price ahead of the election to anger the American public. Likewise, some European countries are said to have tried to manipulate the price prior to the election to get John Kerry in office.

Meanwhile, why are oil prices dropping? Oil trackers attribute it to the advent of relatively warm weather and a drop in the supply disruption premium.

In any event, the rising view that oil prices have peaked is ridiculed by some investment professionals, two of whom see legitimate possibilities of oil resuming its upward trend and climbing above $60 a barrel.

One of them is former crack institutional energy analyst Alan Gaines and presently CEO of Houston-based Dune Energy.

He sees several scenarios that could quickly push oil to the $60-$65 a barrel range. One is the recent death of Yasser Arafat. If there is no orderly transition in Palestinian leadership and he’s replaced by radical elements, oil disruptions from the Middle East are a distinct possibility, he observes.

“And if that happens, you won’t see oil just above $60, but above $70,” he says.

Yet another wild card, he points out, is continued rising demand from China. Mr. Gaines cites yet another catalyst for higher oil prices – the failure of capital expenditures at major international and independent oil companies, such as ExxonMobil and Devon Oil, to keep pace with higher prices and higher demand. Instead, he notes, they’re buying back stock or increasing their dividends.

Mr. Gaines is quick to note that while there’s no shortage of oil, the excess is getting whittled down every day. While he believes the price of oil could drop to the low $40s over the near term, he thinks any such decline will be short-lived.

He looks for oil to average in the mid-to-high $40s next year and predicts “you will see a $12-$15 premium in the price for possible terrorism and supply disruptions for the foreseeable future.”

Mr. Gaines notes that many banks are projecting 2005 oil at $33-$35 a barrel, but given current conditions, they’re totally unrealistic, he says. That’s something, he adds, “I wouldn’t bank on.”

Wachovia Securities’ chief economist John Silva, presenting what he believes is “a crude reality check,” argues that while the price has fallen, the trend in oil prices continues upward. As long as the world is growing, the demand for oil will, as well, he says. What’s more, he adds, “with winter at our doorsteps, Mother Nature may be the real market mover in coming months.”

He further believes that if gasoline inventories (generally thought to be on the light side) do not build this winter, oil could easily go above $60 next summer.