• WTI nosedives to $66.80, influenced by global economic deceleration and reduced oil price forecasts.
• Goldman Sachs revises WTI year-end forecast to $81 per barrel amid potential increased supplies.
• Upcoming US CPI data and Fed’s decisions are closely watched; the Saudi production cut provides a slight cushion.

Western Texas Intermediate (WTI), the US crude oil benchmark, plunges sharply due to see an ongoing global economic deceleration, as well as analysts slashing oil price forecasts ahead of the release of inflation in the United States (US), and the Federal Reserve (Fed) meeting on Wednesday. WTI is trading at $66.80, plummeting almost 5% after hitting a daily high of $70.22.

Anticipated US inflation data and Fed’s meeting influence the oil market, as Goldman Sachs trims year-end WTI estimate

Wall Street is trading with solid gains at the start of the week. Expectations for an increase of supplies from Russia and Iran triggered a forecast revision from Goldman Sachs, which downward revised WTI from $89 a barrel to $81 by the year’s end.

Weaker than expected, last week’s data from China, showing that exports contracted above estimates showed a grim outlook for global demand amongst developed markets. Alongside speculations that the People’s Bank of China (PboC) will reduce rates to stimulate the economy triggered Monday’s drop despite OPEC ’s efforts to cushion oil prices.

In the meantime, the US will reveal the Consumer Price Index (CPI) for May, which is expected to show the impact of 500 basis points (bps) of rate hikes by the Fed. Upward surprises on the data would likely trigger a reaction by the Fed, as Jerome Powell and Co would reveal its decision on Wednesday at around 18:00 GMT.

Further Fed increases would boost the US Dollar (USD), a headwind for dollar-denominated assets. However, WTI’s fall was capped by the Saudis, which pledged to cut oil production in July