The chief commodity researcher at Goldman Sachs says the bull case for oil remains in tact despite an escalating trade dispute between the world's two biggest economies that has stoked fears of weakening demand for crude.
U.S. crude settled at a seven-week low below $67 a barrel on Thursday. It is now on pace for its worst string of weekly losses in three years, after China threatened a new round of retaliatory tariffs against the United States.
But Jeff Currie, Goldman's global head of commodities research, is keeping his $70 price target on U.S. crude for 2018, pointing to global economic growth that is tracking around 4.3 percent and could accelerate to 4.7 percent in the bank's view.
"When we look at the fundamental picture, it really hasn't changed," he told CNBC's "Closing Bell" on Thursday. "You've seen substantial liquidation, really off of the headline risk around tariffs, but the underlying fundamental story and the case for owning commodities, as well as oil, really remains in tact."
Currie says low stockpiles of crude means supply shortages could develop in the face of today's strong oil demand. At the same time, labor strikes at Chile's Escondida mine have kept a lid on copper supply, while Saudi Arabia is not flooding the market with as much oil as feared following an agreement by producers to hike output .
China has begun targeting U.S. energy exports. But Currie notes that Beijing declined to slap tariffs on U.S. crude oil exports after earlier threatening to tax shipments from the States, which have surged in recent years.
"The reason why is it can be redirected," Currie said. "You're not going to impact oil because there's so many producers, so many consumers."
China also announced plans last week to apply a 25 percent tax to U.S. liquefied natural gas, or LNG, a form of the fuel super-chilled to its liquid form so it can be shipped by sea. LNG played a high-profile role in U.S.-China trade talks prior to the start of tit-for-tat tariffs.
On Wednesday, the Wall Street Journal reported that Goldman's commodity trading unit is in talks to purchase its first cargo of LNG from Houston-based Cheniere Energy . Currie did not comment on the report, but laid out a bull case for LNG prices, saying U.S. exporters are well-positioned to meet growing demand from Asia.
Similar to crude oil, the international system could struggle to meet demand for LNG, he said, noting that summer prices in Asia, the biggest market for the fuel, are near levels usually seen during the peak winter season.
The price for LNG shipment into key Asian markets is hovering around $10 per million British thermal units, while U.S. Henry Hub natural gas prices are below $3 per mmbtu, Currie said. That allows U.S. suppliers to sell LNG into Asia at about $8 per mmbtu. So even with a 25-percent tariff, American exporters could compete in the Chinese market, according to Currie.