Goldman Sachs continues to be very bullish on energy and believes that the upside risk in crude oil and refined products “is tremendously high right now,” Jeffrey Currie, global head of commodities research at Goldman Sachs, told CNBC’s Squawk Box on Monday.
The recent pullback in oil prices could be a buying opportunity because prices are set to go higher from here this summer, according to the Wall Street bank.
“The bottom line is the situation across the energy space is incredibly bullish right now. The pullback in prices we would view as a buying opportunity,” Goldman’s Currie told CNBC today.
“At the core of our bullish view of energy is the underinvestment thesis,” Currie added.
“And that applies more today than it did two weeks, three weeks ago, because we’ve just seen exodus of money from the space…investment continues to run from the space at a time it should be coming to the space,” he said.
“Ultimately, remember, the only way of solving these problems is to increase investment, so we stick to our guns of oil prices moving into the summer up into $140 a barrel range given record-level cracks, and that’s going to be a lot more upside to product prices,” Goldman’s Currie told CNBC.
In addition, oil could be one of the substitutes for natural gas in Europe, which struggles with significantly reduced Russian supply via the Nord Stream pipeline, he added.
Oil prices have slumped in recent days, with Brent tumbling below $110 a barrel at one point last week, as a growing number of analysts and economists now say that the Fed’s attempts to rein in inflation with aggressive interest rate hikes may not produce the policy makers’ goal of a “soft landing” of the U.S. economy and will actually lead to a recession within a year or a year and a half.