Last week's steep sell-off in crude futures hasn't altered the bullish oil price forecasts from a clutch of closely watched Wall Street banks, but it has injected a note of caution into their most recent research.

Price forecasts from major banks are closely watched by investors seeking indications of where the market is headed next, and in recent months the banks have pointed in only one direction: up.

Concerns that the stumbling global economic recovery could dent oil demand have caused prices to decline around 10% since last Monday, but big banks have largely maintained their oil price forecasts.

In a note published Monday, Goldman Sachs Group (GS) defended its view that European benchmark Brent crude would be at $120 a barrel by the end of the year and average $130 a barrel in 2012.

The bank points to its forecasts for global economic growth, adding that they are high enough to put pressure on current oil supplies. It also expects strong growth in emerging markets, particularly as countries such as China are able to loosen their monetary policy.

The loss of 1.3 million barrels a day of Libyan crude exports would also continue to support oil prices as it offsets concerns over weakening demand, it added.

Other big banks, such as Barclays Capital, Bank of America Merrill Lynch and Morgan Stanley (MS), have also kept their price forecasts unchanged.

But now, a touch of caution has crept into analysis from both Merrill Lynch and Goldman Sachs. In notes published Monday, the two banks warned that the risk has increased of a global recession, an event that would weaken oil demand and pressure prices.

Goldman said it now sees a one in three chance of the U.S. entering recession in the next six months. Merrill Lynch said a recession in the U.S. would push Brent down to around $80 a barrel.

Many analysts are critical of the banks' optimistic price view given clear signs that the global economy is now facing some very serious stumbling blocks.

"It seems overly optimistic at the moment," said Ole Hansen manager of the futures and fixed income trading desk at Saxo Bank.

"Brent is trading in the $105 to $120 a barrel range it has done since May so all is not lost for the bulls, but given the economic backdrop it seems a bit far-fetched at the moment," Hansen said.

-By Sarah Kent, Dow Jones Newswires; 4420-7842-9376; sarah.kent@dowjones.com

(Konstantin Rozhnov in London contributed to this report)