Oil plunges 4%; Brent below $72

Oil drilling rigs

Oil slumped today, June 12, as investors assessed supply and demand prospects ahead of the US Federal Reserve's upcoming monetary policy decision.

International benchmark Brent crude fell by 3.9% to close at $71.84 a barrel, West Texas Intermediate (WTI) crude slumped 4.4% to $67.12 a barrel.

Goldman Sachs revised its forecasts for oil prices amid higher global supplies from countries facing sanctions such as Russia, Iran and Venezuela, in conjunction with a possible decline in demand as a result of the ongoing monetary tightening.

The investment bank cut its forecast for Brent crude for December delivery to $86 a barrel, from $95, and WTI crude was lowered to $81 a barrel from $89.

On the other hand, Pioneer Natural, the largest producer of shale oil in the US, expects crude prices to rise later this year, as they will trade in a range of between $70 and $100 over the next three to five years.

An official with China's National Reform and Development Commission said that the country's non-fossil fuel energy sources now generate more than 50% of China's total installed capacity of electricity.

This week, the markets are awaiting the monthly oil reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency. The meeting Federal Reserve is scheduled on June 14, with expectations that interest rates will be fixed in the current range.