(FORTUNE Magazine) – Only a few weeks ago shareholders of big oil companies were steaming through untroubled seas, all engines ahead full. The price of crude had jumped to three-year highs. Many oil stocks had made double-digit gains, and vigorous industrial demand guaranteed bountiful earnings for the balance of the year. Then the Exxon Valdez hit the rocks and analysts paused to reconsider. The verdict: Some angry motorists may bypass their local Exxon dealer, but the news from Prince William Sound won't hurt the other major oils. / Underlying this continued optimism is the fact that the world consumes substantially more oil than it did only a few years ago. Recent studies by the International Energy Agency, which monitors worldwide energy use, indicate that free-world demand for crude surged 3% last year, a much faster clip than expected. That has offset restrained cheating by OPEC, which agreed at a meeting in Vienna last November to restrict production to 18.5 million barrels a day and has been producing less than 22 million. Forecasting the price of crude is a slippery science. Fortune Forecast expects a gentle decline this year, but the bulls think otherwise. ''Looking at the supply-demand situation, I have to believe oil will rise $1 to $1.50 a barrel each year for the next several years,'' says William Randol of First Boston. He points out that oil is cheap today. Because the price of oil is denominated in dollars, the decline of the greenback makes crude still less expensive overseas. ''Oil costs us half what it did in 1985, allowing for inflation,'' Randol says, ''and for the Japanese the price is only 25% of what it was because of the lower dollar.'' No matter how jittery economists are about GNP growth, demand for oil seems likely to stay healthy for at least the rest of the year. Worldwide jet-fuel consumption topped 1.47 million barrels a day in January, up 18.4% over January 1988 -- itself a strong month. Motorists' appetite for gasoline appears insatiable. The price of unleaded has soared on the West Coast not just because the Exxon spill temporarily cut off the flow from Alaska, but also because a mild winter kept demand in Europe so robust that supplies cannot be diverted. Philip Verleger of the Institute for International Economics in Washington believes that producers with ample capacity to refine gasoline, and those with good access to the light crude used to make it, are in the driver's seat. British Petroleum, which has abundant reserves of light crude in the North Sea, fits the description. Paul Mlotok of Morgan Stanley, who recommends BP shares, expects investors to reap a 20% total return over the next 12 to 18 months. BP recently sold for $57 a share, 13 times 1988 earnings. Bryan Jacoboski of Paine Webber favors Chevron, which had over $25 billion in revenues last year, making it No. 4 in the U.S. after Exxon, Mobil, and Texaco. ''Its 20% return on capital is the lowest of any of the majors,'' he says. ''If the company managed its assets better, which it has begun to do, + the stock would be worth $70, not $52.'' Bernard Picchi of Salomon Brothers takes a different tack, analyzing oil stocks as asset plays. ''I like the ones that trade at around 60% of net asset value,'' he says. Both Picchi and Todd Bergman of Goldman Sachs think Amerada Hess has the biggest trove of hidden goodies. It recently made several large discoveries in the North Sea, which Picchi says alone are worth more than the $37 share price: ''So when you buy the stock you get the exploration and production, the East Coast service stations, the largest refinery in the Western hemisphere on St. Croix, and a piece of the Alaska pipeline, all for free.'' Picchi also recommends Atlantic Richfield and Ashland Oil. ''Arco is the consummate domestic integrated oil company,'' he says. ''It has tremendous unbooked resources and an extremely high return on capital.'' Arco dominates the West Coast service-station market. Of Ashland, Picchi says, ''It's in the final stages of disinterring itself from a living burial.'' Besides its refineries, Ashland owns Valvoline motor oil, SuperAmerica convenience stores, and engineering and chemical operations. Picchi sees the stock reaching $60 within a year; it traded recently at $40. Amoco also looks undervalued to analysts. The stock yields 4.7%; it sells for only ten times analysts' reckoning of 1989 earnings -- and 67% of estimated net asset value per share. Bullish analysts believe the company will soon begin to realize more underlying value. Amoco is a natural-gas play too, since it owns 10.7 trillion cubic feet of the stuff -- more than any other oil company. Many analysts look for the price of natural gas to start rising smartly.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: West Texas Intermediate Spot Price ROOM TO GROW IN The price of West Texas intermediate crude oil, shown here flowing out of a wellhead near Midland, has risen from $13 a barrel to $20 since last fall. So far Standard & Poor's index of oil stocks, which usually mirrors crude prices, hasn't climbed as sharply. The oil is a yellowish beige because it is mixed with natural gas and salt water. When purified, the crude turns blue-green.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: S&P Oil Stock Composite See above.