Oil prices could still rise substantially in the coming months, two large investment banks have warned.

CSFB said oil could spike at $50 (€40.45) to $60 a barrel within the next year, while Deutsche Bank said that 2004 is poised to be the sixth successive year in which analysts have underestimated the strength of oil prices.

CSFB said hopes of a return to a "normal" oil price - one centred on $18 a barrel in the middle of the price cycle - have evaporated over the past year. "We seem to have entered a new phase of 'energy insecurity' in which higher, and more volatile, oil prices will be the norm," it said.

"We suggest that somewhere around $30 a barrel [for West Texas Intermediate measure] may be the effective 'floor' for oil prices for some time, and that it cannot by any means be ruled out that oil prices briefly trade in the $50 to $60 range within the next 12 months."

The bank's analysts say that "in principle" prices should revert to a $30 to $35 range, as global growth and demand for oil slows next year.

However, it added that political instability or further disruption to production could mean a temporary spike to the higher levels. CSFB says such oil shocks may be beneficial. It says the adjustment would be "difficult and dangerous" but the world's economy is more flexible and adaptable than in the 1970s.

"It might well stimulate a longer-term boom in energy investment, conservation and switching to alternative fuels that turn out to be a longer-term positive for the economy, the planet and just possibly geo-political stability."

Deutsche Bank reiterated its view that prices will continue to rise, saying it is currently only in line with its historical average relative to incomes in the world's seven largest economies. On that measure, even $80 would not be unusual by 1974 to 1985 averages.

"In real terms, and relative to G7 per capita incomes, oil prices are not yet at extreme levels and producers and consumers must position for further price highs in the weeks ahead," said Michael Lewis, head of commodities research.

Schroders took the opposite view. It said the high levels are unsustainable. It thinks a meaningful reduction is unlikely before the end of the year but there is "a real chance" of a $10-$15 a barrel fall in price.