Oil prices could fall sharply toward the end of this year or early next year as evidence of eroding demand in Asian economies slowly materialises, investment bank Lehman Brothers said in a report.

Oil prices surged to a record high above $139 a barrel on Friday, sharply reversing nearly $14 in losses over the previous two weeks, when traders had fretted that Asian demand growth could wane as many nations cut subsidies, raising fuel prices.

Prices slipped 0.5 percent to below $138 on Monday.

Lehman analysts said they believed oil prices in the high double-digits would curb demand growth enough to allow supplies to catch up, but that it may take months for demand destruction to appear in data, and that oil traders "appear to have lost patience".

"If prices continue to rise from here, we fear that economic tipping points could be reached in Asia and the market will find itself with more demand destruction than it cares for," analysts Adam Robinson and Michael Waldron said in a report dated June 6.

"The problem, however, is that barring an economic meltdown, the data we need to verify our oil market argument is unlikely to become available until well after this summer."    

Unlike most industrialised nations that release detailed data on oil production, demand and inventories on a weekly or monthly basis, major Asian economies including China and India typically release only output and trade data, leaving analysts to guess at things such as consumption rates or changes in stocks.

After six years of rallying oil prices, demand destruction is now becoming apparent in the United States, whose gasoline use is more than one-tenth of the world's oil consumption.

US average pump prices rose above $4 a gallon for the first time, the AAA travel group said on Sunday. A survey issued last week by Ipsos Public Affairs found 74 percent of Americans would change their driving habits if prices were to top $4.

"Until Q4, there certainly appears to be additional spike risk in an impatient market. But when the data becomes available, the price action could be as sharp on the way down as on the way up," the Lehman analysts said.

Asia's third-largest consumer India -- plus smaller users Taiwan, Malaysia, Indonesia and Sri Lanka -- have all hiked fuel prices as the burden of cheap subsidised fuel becomes too great to bear, although many analysts see little hope for a significant fall in demand unless China also raises regulated prices. - Reuters