Goldman Sachs raised its end of 2009 oil price forecast to $85 a barrel from $65 and introduced a new end of 2010 forecast of $95, the US bank said in a research note

"The recent rally in WTI (US crude) prices is likely to be but the first stage in the oil price rally that we expect will accompany a recovery in economic activity," Reuters quoted Goldman as saying in a note.

The US oil price has jumped from nearly a five-year low of $32.40 a barrel in December to a new seven-month high of $69.05 yesterday as signs of economic recovery led to thoughts of a subsequent increase in demand for fuel.

Goldman said it expects further oil price increases in the second half of 2009 as the economy stabilises and OPEC maintains cuts to oil supplies.

Since September last year, OPEC has agreed to lower oil output by 4.2 million barrels a day and has implemented around 80% of the promised cuts, helping to push oil prices higher.

OPEC members' adherence to output curbs appears to be easing, and Reuters' latest survey of its production in May put the compliance rate at about 75%.

However, Goldman said even if OPEC oil output increases next year there may still be insufficient supplies due to a lack of investment.

Goldman said in the second half of 2010 there would be: "A likely return to energy shortages as dwindling OPEC spare capacity is likely (to be) unable to meet rising demand as Non-OPEC production growth is restricted by limited investment in oil production infrastructure."

The investment bank raised its 12-month US crude price target to $90 from $70.