Investing.com -- Oil prices traded sharply lower Monday amid persistent concerns around the global demand outlook ahead of a crucial policy-setting meeting of the U.S. Federal Reserve.
By 09:35 ET (13:35 GMT), U.S. crude futures traded 3.3% lower at $67.78 a barrel, while the Brent contract fell 2.9% to $72.61 a barrel.
The Brent contract posted a 1.8% decline last week, the biggest weekly decline since early May, prompting Goldman Sachs, normally one of the more bullish banks in terms of the oil outlook, to make its third downward price revision for the global benchmark in six months.
The influential investment bank cut its Brent forecast for December to $86 a barrel, down from its previous estimate of $95 a barrel.
Weighing heavily on the wider oil market have been fears that the aggressive rate-hiking cycle by the Fed will send the U.S. economy, the largest consumer of crude in the world, into recession in the second half of the year.
The U.S. central bank meets this week, and is generally expected to pause its interest rate increases. However, the latest release of U.S. consumer prices is due the day before Wednesday’s announcement, and any sign that inflation is struggling to fall could prompt another rate hike.
The European Central Bank also meets this week, and is expected to hike once more, even after data released last week put the eurozone in recession in the first quarter of the year.
“The rate decisions will be watched closely for broader economic projections and crude oil demand expectations,” analysts at ING said, in a note.
Additionally, data out of China, the world’s largest importer of crude, has pointed to a lackluster recovery from its COVID hit, a big disappointment to traders who had been banking on this key market to provide much of the demand growth forecast this year.
In terms of supply, Russian output has held up despite the European Union's embargo and the Group of Seven's price cap mechanism, with oil exports to China and India growing.
Talk is also growing that Iranian crude may return to the global market following reports that Tehran was in talks with Washington over an interim nuclear deal to get sanctions relief.
An Iranian foreign ministry spokesman on Monday denied the two countries were in negotiations, but these reports continue to emerge.
There was some positive news after exchange data released late last week showed that speculators increased long positions, with the ICE Brent contract seeing the largest net long since end-April.