Feb. 8 (Bloomberg) -- Crude-oil prices may rise as high as $71.50 a barrel this year because investment by oil companies to boost output is lagging behind demand, said James Gutman, an economist at Goldman Sachs Group Inc.

Oil may rise to an average $69 this year from $66.25 in 2006 in New York after producers failed to boost output ``significantly'' since 2004 to meet higher consumption, Gutman, a senior economist in the global investment research unit said at Goldman's Commodities Outlook conference in Hong Kong today.

Crude oil last traded at $57.80 in New York, rebounding from a 20-month low of $49.90 on Jan. 18 as late winter weather swept through the U.S. and Europe. Goldman is predicting oil will rise to a record average price this year as companies increase investments to expand production to meet demand in developing nations such as China.

``Those price rises you've seen over the course of the past few years are related to the structural underinvestment and the depletion of excess capacity,'' Gutman said. ``The current investment phase is far from over.''

Crude oil averaged $56.71 a barrel in 2005 and $41.46 in 2004.

Futures for March delivery was little changed today at $57.77 a barrel on the New York Mercantile Exchange at 11:50 a.m. in London. The futures have gained 16 percent since Jan. 18.

Investors have become ``a bit too bearish on crude oil,'' London-based Gutman said. Investment phases are characterized by rising prices as high prices motivate companies to spend money to drill for oil, he said.

Rising Costs

While rising costs to extract oil from fields that were considered ``marginal'' and investment uncertainty will continue to support long-term oil prices, inventory levels drive the ``cyclical component'' of prices, according to Gutman. The ``global oil balance'' has shifted into deficit, he said.

Demand for oil in China, the world's biggest energy consumer after the U.S., will also help drive up oil prices, Gutman said.

``China is not why crude oil prices end up at $80 a barrel,'' he said. ``China is just the last straw.''

To contact the reporter on this story: Ying Lou in Hong Kong at ylou1@bloomberg.net.

Last Updated: February 8, 2007 07:02 EST