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US NEWS 
By Jonathan Ferro, Lisa Abramowicz, and Annmarie Hordern
Veteran commodities strategist Jeff Currie said average US gasoline prices will almost certainly hit $5 a gallon before the midterm elections, citing a toxic combination of scarcity and currency debasement.
Shortages that began in refined products are now spreading upstream into crude oil as the energy shock reaches a dangerous new phase, according to Currie, the founder and chief executive officer of Real Macro, who built his name on Wall Street at Goldman Sachs Group Inc.
“Crude is the signal, and now we think about products — they are the noise,” Currie said Friday in an interview on Bloomberg Television’s Surveillance.
Gasoline at $5 a gallon is an important psychological marker, especially with control of Congress hanging in the balance in the Nov. 3 midterm balloting. Prices at retail pumps haven’t topped that level since the jump in post-pandemic inflation in 2022, but the recent flare-up in the US-Iran war pushed the average to more than $4.29 a gallon as of Thursday. Diesel topped $6 a gallon for the first time.
Currie put the probability of $5 gas by Election Day as “extremely high,” warning that refineries cycling between diesel and gasoline output will eventually exhaust their operational flexibility. In addition, Strategic Petroleum Reserve releases, which have helped bridge supply gaps, show no sign of being renewed, he said.
US diesel could reach $7 to $9 a gallon, Currie said.
Currie said the price moves on Thursday — when Brent futures popped more than 8% at one point — signaled that markets are bracing for a larger and more-sustained disruptions. The entire forward curve moved, not just the front end, he said.
“You’re entering a really dangerous phase of this commodity rally because the shortages are so extreme on both sides that the whole complex moves,” Currie said.
That kind of simultaneous surge signals something more structural than a typical supply squeeze, he said. Currie said he had been unwilling to recommend going long crude and short on products — a trade that would have backfired as both legs rallied together.
In other commodities, Currie said soybeans at $13.30 a bushel — “beans in the teens” — alongside elevated wheat and corn prices constitute an active “food crisis.” Meanwhile, with copper repeatedly resetting all-time highs in recent weeks, “the illusion of abundance” is preventing marketsother commodities and policymakers from acknowledging the reality of scarcity already underway, Currie said.
“I’m just banging the table if there’s ever a time to own commodities,” he said. “In fact, you can’t get a better story. If it doesn’t work with scarcity and debasement together, it’ll never work.”
(This story was produced with the assistance of Bloomberg Automation.)
— With assistance from Simon Casey
(Updates with comments on oil markets in seventh paragraph)
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