Aug. 18 (Bloomberg) -- Goldman Sachs Group Inc., the third- biggest U.S. securities firm by market value, raised its oil forecast for next year to $68 a barrel and said crude will stay at about $60 for years to come.

Goldman increased its projection for New York prices for 2006 from $55 a barrel. The forecast for $60 oil for the ``long term'' was raised from $45 because companies aren't investing enough in new supply, according to the Aug. 17 report from the firm's commodity research analysts, including Steve Strongin in New York and Jeffrey Currie in London.

``Reinvestment rates if anything appear to be falling not rising,'' the report said. Higher taxes, a shortage of rigs and workers and a lack of available oil and gas reserves are all driving up costs, the analysts said.

Goldman Sachs earlier this year was criticized after an equity analyst there, Arjun N. Murti, said oil prices could experience a ``super spike'' to $105 a barrel should supplies be disrupted from the Middle East. Goldman is one of Wall Street's two largest commodity traders, along with Morgan Stanley.

Goldman and Morgan Stanley each get more than $1 billion a year in revenue in the $60 billion-a-day energy-trading market, according to estimates by Sanford C. Bernstein & Co. analyst Brad Hintz in New York.

Oil for September delivery on the New York Mercantile Exchange was trading at $63.77 a barrel at 11:23 a.m. London time, having dropped from a record $67.10 last week, a record for a contract nearest to expiration. Oil futures for delivery in December 2007 traded at $61.34 today.

Will Companies Follow?

The potential for oil prices to fall back to levels seen in earlier years may be delaying investment, the Goldman report said. New York crude fetched about $26 in 2002, compared with its average so far this year of $53.72.

Oil companies may soon follow the investment banks in planning for higher prices, Tor Kartevold, an oil market analyst at Statoil ASA, Norway's biggest oil company, said in a telephone interview from Stavanger. Such a decision would allow greater investment and help justify acquisitions.

``Historically investment banks have been quite influential in the thinking of the oil companies,'' Kartevold said in a telephone interview from Stavanger. ``The oil industry still uses prices of something between $20 and the low $30s. So there is a huge gap between the futures market and the current price assumptions of the oil companies.''

Statoil has told investors it uses an oil price assumption of between $25 and $30 a barrel for the long term, or beyond 2009. BP Plc Chief Executive John Browne on July 26 said prices are likely to drift back toward $40 a barrel.

To contact the reporter on this story: Stephen Voss in London at sev@bloomberg.net

Last Updated: August 18, 2005 06:30 EDT