Oil Prices Recover after Falling 4% amid Concerns over Weak Demand, Goldman Cuts Forecast

Oil prices rebounded in early Asian trade on Tuesday after suffering sharp losses the previous session, however markets remained cautious ahead of U.S. inflation data report and the Federal Reserve meeting.

Brent crude futures rose US$0.52, or 0.72%, to US$72.36 a barrel as of 10.45 A.M. Bangkok time. West Texas Intermediate crude added US$0.37, or 0.55%, to US$67.49 a barrel.

Both contracts dropped by roughly US$3 a barrel on Monday as analysts pointed out increased global supply and worries about demand growth ahead of vital inflation data and a US Federal Reserve meeting later this week.

Goldman Sachs lowered its oil price predictions on Sunday, citing higher-than-anticipated supplies later this year and until 2024. The investment bank cut its crude price projection for December from US$95 to US$86 per barrel for Brent and from US$89 to US$81 per barrel for WTI.

The focus of the markets is now on the U.S. consumer price index inflation data due later today, which is expected to factor into the Fed’s interest rate decision on Wednesday.

Despite widespread expectations that the Federal Reserve will stop its rate hike cycle, traders were wary of any hawkish surprises from the central bank due to the robust labor market and signals of relatively strong inflation.