Carlyle’s Currie Says Oil, Metals Markets Are ‘Underinvested’
(Bloomberg) -- Oil and metals markets are “substantially underinvested” and have significant upside, said Carlyle Group Inc.’s Jeff Currie, adding the longstanding oversupply narrative weighing down crude prices is overblown.
“If you are having to scrape the data to find evidence of the glut, it is not an oil supply glut,” the investment firm’s chief strategy officer said in on Bloomberg Television Monday. “These things hit you over the head like a sledgehammer.”
Oil prices in New York are up more than 10% this year, trading near $64 a barrel and flying in the face of Wall Street analysts who have long warned of a price-crushing oversupply. Much of the gap between forecasts and reality has been attributed to sanctioned Russian barrels sitting at sea — supply that exists, but that only a handful of countries are willing to buy — while China has absorbed much of the surplus.
Currie estimates as many as 100 million barrels could reenter the market if international sanctions were imminently rolled back, a scenario that would be difficult to execute and “nobody expects,” he added.
Prices also have received support from a slew of tailwinds, including tensions between Washington and Tehran, disruptions at a key export terminal in the Black Sea and a US winter storm.
Rising geopolitical risks are leading to hoarding across all commodity classes, according to Currie, driving a rotation away from the tech-led “new economy” and toward the asset-heavy industries of the old economy. This environment is most reminiscent of the gold surge that followed the collapse of the dot-com bubble in the early 2000s, he added.
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