Oil Slides Below $78.00 After OPEC, IEA Monthly Reports

Oil prices are 0.25% down, sliding below $78.00 after both OPEC and the International Energy Administration (IEA) released their monthly reports. OPEC stuck to previous expectations, while sluggish demand is forecasted in the IEA release. The US Dollar Index eases ahead of the US CPI print, with markets expecting a lower number than previously anticipated.

The IEA slashing its forecast for oil demand and OPEC sticking to its previous expectations further blurs the outlook picture. The steady-for-longer stance from the US Federal Reserve (Fed) is postponing that initial rate cut, which would mean a surge in demand. The US Dollar Index (DXY) is retreating further below 105.00 after the US Consumer Price Index (CPI) print.

Markets were convinced the number would be lower than previously anticipated after the Producer Price Index (PPI) release on Tuesday saw downward revision across the board in both core and headline PPI. With CPI back in its disinflationary path, more Dollar selling could be taking place in the coming days.

Ahead of the next OPEC meeting, the group has ordered an outside, external review to know how much capacity each member has. Mexico has lowered its pricing for Maya Oil for Gulf Coast refiners, and the IEA reports that world consumption will increase by 1.1 million barrels per day this year, 140k barrels less than expected a month ago.

Oil prices are set to crack under pressure with the steady-for-longer rate stance of the Federal Reserve, meaning that the surge in demand from the US will not take place until after the summer at earliest.