LONDON (Reuters) - Bears are a rare breed, but not yet extinct in an oil market where prices have doubled in the past 12 months and risen by a quarter this year.

Flames rise from an oil refinery in Cairo, May 6, 2008. REUTERS/Nasser Nuri

History shows price booms do not usually run on uninterrupted.

But for oil, which has been rising since 2002, many of the elements that could bring prices down are still missing.

“Until there’s some definite evidence of a surplus growing somewhere in the system, prices will continue testing up,” said Paul Horsnell, head of commodities research at Barclays Capital.

Investment bank Goldman Sachs has predicted a rise to $200 a barrel over the next six to 24 months, and other energy analysts see high prices for years to come.

There are a few analysts pointing to price-cooling factors.

“The basic fundamentals are already very much in place for prices to move lower,” said Tim Evans, energy analyst at Citigroup.

“Inventories are above the five-year average in terms of days of supply coverage, supply may grow in excess of 3.0 percent this year, more than double the 1.5 percent growth that the International Energy Agency forecasts for global demand.”

There is so far little evidence the price surge has had a major impact on consumption, which has become more responsive to levels of gross domestic product (GDP) growth than prices.

But in the United States, the world’s biggest energy consumer, the combination of high prices and slower GDP growth is having some effect.

Higher prices for gasoline and the sluggish economy is forecast to hit U.S. oil demand through the summer driving season more than expected, the U.S. Energy Information Administration has said.

The EIA expects total petroleum demand, which includes diesel fuel and jet fuel, in the current quarter to be 90,000 barrels per day less than it forecast last month and down 170,000 bpd compared to the second quarter last year.

For 2008 as a whole, demand is forecast to fall by 190,000 bpd, 90,000 bpd more than the agency’s forecast last month.

Lastest U.S. EIA data on fuel inventories for the week to May 2 showed a 5.7 million barrel rise in crude oil stocks, while gasoline stocks rose by 800,000 barrels.

High oil prices are cited as a factor pushing the U.S. stock market lower, because of fears record oil will dampen demand from consumers already hurting from a housing slump.

“There are some leading indicators pointing to why you might see more structural weakness in the market in the remainder of the year,” said James Crandell, energy analyst at Lehman Brothers.

CHINA DEMAND

Bulls are relying on China and India demand to offset weakness in the United States, but a removal of government subsidies on fuel in emerging economies could upset this balance.

“The increase in demand from industrializing economies, together with ongoing supply constraints, mean that oil prices are likely to remain high well into the next decade,” said Robin Batchelor, fund manager of BlackRock’s world energy fund.

“If China and India were to increase their consumption per person to current U.S. levels, these two countries alone would require 160 million barrels per day, more than twice the world’s supply of oil today.”

But if governments need to reduce or remove subsidies, their consumers would then feel the real cost of energy.

Oil has soared partly because demand from China and India is surging when supply growth is constrained after years of underinvestment in production and refining capacity in the West.

Producer group OPEC is keeping a lid on exports, Nigeria has seen big disruptions to production and Russia, the world’s biggest non-OPEC producer, has seen a slowdown in output growth.

The pattern of oil prices over the past three decades is a roller-coaster, with big peaks and troughs.

Prices in nominal terms advanced from 1970 into the early 1980s, for example, driven partly by the Organization of the Petroleum Exporting Countries’ move to exert influence over prices, the Iranian Revolution and the Iran/Iraq war.

But then prices fell back through the mid-1980s to early 1990s, due to economic recession as well as supply growth from the North Sea and Alaska.

Oil’s dizzying rise this time round has frequently led to warnings of a sudden and sharp correction.

“Those signed up to bubble theories, or currency effects or speculative effect theories would no doubt speak in grim tones of a likely crash,” said Horsnell. “Mind you, they did that at $30, $40, $50, $60, $70, $80, $90, $100 and $110 and so I suppose it is too late at $120 for them to now change tack.”