Crude prices are tumbling on recession fears, but one analyst remains bullish on oil stocks, saying a downturn is unlikely to dampen demand too much. Dan Pickering, chief investment officer at Pickering Energy Partners, said that some energy sectors had reported strong second-quarter earnings, such as refiners, exploration and production companies, and oilfield services. The companies have "dramatic cash flows … much of it returned to investors via dividends, variable dividends, share repurchases [and] debt paydown," he told CNBC. Pickering argued that certain firms' balance sheets are "as healthy as [they have] been in decades," while valuations look "inexpensive" even if oil drops to $70 per barrel — the low end of expected prices in a mild recession scenario, Pickering said. International benchmark Brent crude futures traded around $94 a barrel on Monday, while U.S. West Texas Intermediate futures were around $88. They have both fallen sharply from June highs of over $120 a barrel, although remain up on the year. Stock picks Pickering's favorite stocks include Devon Energy , Diamondback Energy and Antero Resources in the exploration and production sector, and Schlumberger in oilfield services. He isn't the only one optimistic on energy stocks: Goldman Sachs told clients in July that Diamondback Energy , EQT and Chesapeake Energy were solid bets for investors from a risk-versus-reward standpoint. The S & P 500 Energy Sector 's price-to-earnings ratio for the last 12 months was 12.52 times, according to FactSet data as of Aug. 8, compared to the broader index which was around 19 times. A lower price-to-earnings ratio is attractive to investors. Pickering said that although usually during recessionary periods oil demand growth slows, "we don't typically go negative unless it's a really bad economic event, like the global financial crisis in 2008, 2009, or Covid in 2020." "The reality is, we still have a real tight market, particularly as we squeezed the Russians out on the supply side," Pickering told CNBC's "Street Signs Asia" on Aug 4. In response to Russia's invasion of Ukraine earlier this year, the U.S. has banned Russian crude imports, while the European Union is planning a gradual phase out of Russian crude imports . And despite recent falls, Pickering expects crude prices to return to around the $100 mark by the end of the year. "It's probably not going to be $200. But I think it's going to continue to be higher than most people would like and pretty dang good for the energy sector," Pickering said.