BENGALURU, June 12 (Reuters) – Oil prices fell to multi-week lows on Monday after analysts highlighted rising global inventories and concerns about demand growth ahead of key inflation data and a meeting of the US Federal Reserve later this week.
Brent crude futures fell $2, or 2.7%, to $72.79 a barrel at 11:50 a.m. EDT (3:50 p.m. GMT), while West Texas Intermediate crude futures fell $2.16, or 3.1%, to $68.01 a barrel.
Goldman Sachs lowered its oil price forecasts due to higher-than-expected supplies from Russia and Iran. The bank’s rough price forecast for December now stands at $86 a barrel for Brent, down $95, and at $81 a barrel for WTI, down $89.
“Goldman capitulates to their bullish price forecast appears to have been the catalyst to kick-start sales today,” Kpler analyst Matt Smith said.
The review comes at the start of a busy week for the US Federal Reserve, which meets on Wednesday and is expected to leave interest rates unchanged this month. However, investors are concerned that the Fed is likely to resume rate hikes from next month, according to UBS analyst Robert Yawger.
The Fed’s rate hikes have strengthened the dollar, making US currency commodities more expensive for holders of other currencies and weighing on prices.
Investor demand also continues to weigh on China, the largest importer of crude oil and refined products.
That could lead to downward revisions to demand forecasts from the Organization of the Petroleum Exporting Countries and the International Energy Agency, which will release monthly market updates on Tuesday.
“Chinese demand has shown no signs of reality, and it could be as high as 2 million barrels a day, so it is a significant amount. There is definitely a fear that these guys (OPEC and IEA) will cut their demand forecasts, Yawger said.
Last week, both Brent and WTI reported second consecutive weekly declines after disappointing Chinese economic data raised concerns about demand growth at the world’s largest crude importer. That reversed a rise in prices after Saudi Arabia pledged to cut output by 1 million barrels per day (bpd) in July.
Reporting by Shariq Khan Additional reporting by Noah Browning, Florence Tan and Mohi Narayan Editing by Emelia Sithole-Matarise, Jason Neely, Paul Simao and Sharon Singleton