When Goldman Sachs strategists Damien Courvalin and Jeffrey Currie put their bullish predictions under scrutiny, they identified that Brent’s fair value would continue to outperform current market forwards in the second half of 2022 and 2023, despite growing worries about oil fundamentals, including higher supply and weaker demand.

Despite the recent market sell-off, Goldman Sachs maintains an optimistic outlook on oil, restating in a note that “the skew to prices from here is squarely skewed to the upside.” Low stockpiles and a potential Saudi/UAE production ramp-up in the range of 500,000 barrels per day (bpd) will further deplete “record low spare capacity,” according to Goldman Sachs’ analysts in the note, which will severely shift the risks to the upside.

A negative scenario would result in Brent’s fair value falling from Goldman’s projections of $135 and $125 per barrel, respectively, to $120 in the second half of 2022 and $110 in 2023, according to the bank’s strategists. Even in the worst-case scenario, a Brent fair value of $105 for H2 2022 and $90 in 2023, both above market forwards, would still be implied.

“As a result, we reiterate our bullish oil price view following the recent sell-off,” Goldman Sachs said.

Early on Thursday, oil prices had fallen by 4% to levels last seen in February, just before Russia’s conflict with Ukraine had begun.

The upside risk in crude oil and refined products is “tremendously high right now,” according to Jeffrey Currie, global head of commodities research at Goldman Sachs, who made this statement towards the end of last month.

According to the Wall Street bank, the recent drop in oil prices could be a purchasing opportunity because prices are anticipated to rise from this point this summer.