Six years after former BP Chief Executive Bob Dudley said that "The industry needs to prepare for lower for longer," more major investment banks now expect oil prices to "stay higher for longer." Rising global oil consumption amidst tight supply, contrary to some forecasts last year suggesting demand may have peaked or was nearing its peak, and years of underinvestment in new supply since the 2015 downturn have prompted Wall Street banks to significantly raise their short- and medium-term oil price projections. Oil prices have reached multi-year highs in recent days, with WTI Crude hitting its highest level since 2014 and Brent Crude reaching its highest level since October 2018. Even after the recent rally, prices still have room to rise further, according to many major investment banks. Goldman Sachs, for instance, sees Brent reaching $90 per barrel by the end of this year, up from the previously expected $80. The main driver behind Goldman’s higher forecast is the recovery of global oil demand amid still-sluggish supply responses from non-OPEC+ oil producers. The investment bank also expects sustained higher oil prices in the coming years. Fundamentals justify higher oil prices, and the bank's forecast for the next several years is $85 per barrel. Damien Courvalin, Head of Energy Research & Senior Commodity Strategist at Goldman Sachs, told CNBC earlier this month, "Oil demand will reach record highs next year and the year after that; we need to see an increase in investment," he said. "We are facing a potential multi-year deficit and a risk of much higher prices," Courvalin told CNBC. RBC Capital Markets is also bullish on oil prices in the medium term. "We maintain the view that we’ve held all year, that the oil market remains in the early days of a structurally strong multi-year cycle," RBC analyst Michael Tran said in a note in mid-October, as reported by Reuters. Last week, Morgan Stanley raised its long-term oil price outlook by $10 per barrel to $70. BNP Paribas forecasts oil prices nearing $80 per barrel by 2023, according to Bloomberg. UBS expects oil prices "to remain well supported into next year," with the market staying tight at least until Q1 2022, due to the lowest OECD inventories since 2015, only a gradual easing of OPEC+ cuts, and oil demand hitting 100 million barrels per day (bpd) by December 2021. "While demand is also expected to rise next year, additional OPEC+ and U.S. production will balance the oil market. With more OPEC+ members struggling to ramp up production in line with the group’s plans, additions in 2022 will likely only amount to a fraction of the current intended 3.76 mbpd increase, which should prevent the market from being oversupplied, in our view," Giovanni Staunovo, Dominic Schinder, and Wayne Gordon wrote on Friday. "Given all this, we are forecasting Brent to trade at USD 90/bbl in December and March, before declining to USD 85/bbl for the remainder of 2022," added the UBS analysts. After 2022, oil prices are likely to remain structurally higher as oil demand continues to grow while new supply slows consumption growth, especially due to years of underinvestment and pressure on oil companies to reduce emissions and investments in new supply, analysts said. Global annual upstream spending needs to increase by as much as 54 percent to $542 billion if the oil market is to prevent the next supply shortage shock, Moody’s said earlier this month. "Our analysts suggest that upstream companies need to significantly ramp up their spending over the medium term to fully replace reserves and avoid future production declines," said Moody’s Vice President Sajjad Alam. The oil industry has been "severely underinvesting" in supply to meet growing demand, which will return to pre-COVID levels as soon as late 2021 or early 2022, Greg Hill, president of U.S. oil producer Hess Corp., said in late September. Last year, global upstream investment plunged to a 15-year low of $350 billion, according to Wood Mackenzie estimates earlier this year. This concludes the report on "Oil Prices to Stay High in the Coming Years" from GICTrade. Read more news and articles providing information about commodities, finance, and forex in the GIC Journal. Don’t miss the opportunity to join trading training events at NFP live trading and get a trading guide in the form of the ebook scalping manual.