Crude prices to push well past $70-$90 when Fed cuts rates, Carlyle’s Currie says

Crude oil futures finished lower Wednesday, edging off five-month highs after back-to-back session gains, weighed by strength in the U.S. dollar even after some gains were trimmed following the Federal Reserve’s policy announcement.

The policy-setting Federal Open Market Committee kept its main policy rate target unchanged at a 5.25%-5.5% range and left its median estimate for rates by year-end at a level that implies three quarter-point rate cuts for 2024.

The Fed’s rate decision was within expectations and the impact on oil markets was limited, oil analyst Andrew Lipow told Reuters.

Meanwhile, the U.S. Energy Information Administration reported domestic crude oil stockpiles fell by a greater than expected 2M barrels last week, which Kpler analyst Matt Smith attributed to higher refinery runs and strong crude oil exports.

Front-month Nymex crude (CL1:COM) for April delivery, which expire today, closed -2.1% to $81.68/bbl, and front-month May Brent crude (CO1:COM) ended -1.6% to $85.95/bbl, a day after both benchmarks achieved their best settlements since late October.

ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI)

Carlyle Group’s Jeff Currie told Bloomberg this week that commodities are in a “classic late-cycle rally,” and he sees crude oil rising well above the current $70-$90/bbl consensus if the Fed moves to cut interest rates in the coming months.

“I want to be long oil and the rest of the commodity complex in this environment,” Currie told Bloomberg TV in his first interview since joining Carlyle from Goldman Sachs.

“The upside here is significant,” Currie said, as China’s move to support manufacturing and Europe rebuilding stockpiles all point to stronger commodity prices, particularly for oil and copper.