5.1 Crude/Brent
Synthesis
Crude oil prices have strengthened, with Brent trading around $69/bbl, supported by a combination of geopolitical tensions, supply-side concerns, and a "risk-on" sentiment driven by strong US economic data. The geopolitical landscape remains fraught, with Russia accusing the US of coercing nations like India to shun Russian oil, while Israel's Prime Minister is set to meet President Trump to discuss Iran. Supply tightness is a recurring theme, underscored by Shell's warning of a significant long-term production shortfall and OPEC's January output decline. Demand signals are mixed but leaning positive, with US consumer sentiment beating expectations and Chinese equity markets rallying on stimulus hopes. J.P. Morgan (JPM) maintains a watchful eye on global growth, seeing resilience despite headwinds.
Goldman Sachs Oil View: While our long-run crude oil price forecast is above the forwards (Brent 2030 forecast of $75), our near-term base case remains that Brent moderates from $68/bbl to a bottom of $54 by 2026Q4. We expect a 2026 surplus of just over 2mb/d assuming the January supply disruptions in Kazakhstan and the US ease and no large new supply disruptions. We also assume that the share of global inventory increases in the OECD commercial pricing centers picks up from its unusually low just under 10% share in 2025 to the historical norm of ~30%. We estimate a short-term boost to oil prices from a 1pp increase in net managed money as % of open interest of 3.7%. This is equivalent to a 10% short-term oil price boost from a 1 standard deviation year-over-year change in positioning.
Key Themes
Geopolitics: Tensions between the US and Russia over energy sanctions, coupled with ongoing US-Iran and Israel-Iran dynamics, are keeping a risk premium in the market.
Supply Constraints: Shell's potential 350-800 kb/d production gap by 2035 and OPEC's 60 kb/d output drop in January highlight structural and voluntary supply limits.
Economic Resilience: Strong US consumer sentiment and a "short squeeze" equity rally are supporting a bullish macro narrative, countering fears of an immediate recession.
Trade Flows: India's strategic pivot to Venezuelan crude (buying 2 mb for April delivery) and Iraq's move towards fuel self-sufficiency are reshaping global product flows.
Key Market Drivers:
US Economic Data: A beat in US consumer sentiment is challenging the "recession" narrative, supporting oil demand expectations.
OPEC+ Discipline: The group's pause on output increases for Q1 2026 and lower January production are tightening the physical market.
Corporate Guidance: BP's 16% profit drop and Shell's reserve life warning underscore the challenges facing major IOCs in maintaining output.
Supply/Demand Fundamentals:
OPEC Production: Fell by 60 kb/d to 28.34 mb/d in January, driven by cuts in Nigeria and Libya.
Venezuela: Output is recovering, with the Orinoco Belt adding >100 kb/d, pushing total production near 1 mb/d.
Iraq Refining: New capacity is allowing Iraq to reduce imports and potentially export products, altering regional balances.
5.2 Crude Price Actions
Singapore Window
The market traded higher, with March Brent/Dubai rallying from $0.53/bbl to a high of $0.75/bbl before settling at $0.68/bbl. The Mar/Apr Dubai spread saw volatility, initially selling off to $0.27/bbl before rebounding to $0.37/bbl. The Mar/May box saw decent buying interest at $0.26/bbl from Chinese majors. In Dated Brent, the structure strengthened, with Mar DFL trading up to $0.92/bbl and Apr DFL to $0.64/bbl. Buying interest was noted in the 16-20 Feb CFD at $2.38/bbl.
European Window
Strength continued in the European session, with Dated Brent seeing Mar DFL trade up to $1.02/bbl and Apr DFL to $0.69/bbl. Physical window activity was quiet, but paper markets saw buying in 23-27 Feb CFD up to $1.63/bbl and 2-6 Mar CFD up to $1.65/bbl. In the Brent/Dubai market, trading was rangebound with March holding between $0.64-0.68/bbl. The Mar/Apr spread weakened slightly to $0.35/bbl, reversing some of the morning's gains.
5.3 Naphtha
Synthesis
The naphtha market is displaying regional divergence. In Asia, the market is finding support from healthy petrochemical demand, with end-users securing cargoes for upcoming cycles. However, this is balanced against a backdrop of potential run cuts due to poor margins. In Europe, the market is relatively balanced, but crack spreads have shown some resilience. A key supportive factor globally is the diversion of US naphtha to Venezuela, which is tightening the Atlantic Basin balance.
Key Themes
Regional Dislocation: The pull of US naphtha to Venezuela as a diluent is reducing flows to Asia and Europe, supporting prices in those regions.
Petchem Margins: Poor ethylene-naphtha spreads remain a headwind, threatening to curb cracker run rates and feedstock demand in Asia.
European Balance: The European market is finding a floor, with cracks trading around -$5.45/bbl, supported by the tighter global supply picture.
Key Market Drivers:
Diluent Trade: The US-Venezuela trade flow is a structural bullish factor for heavy naphtha grades.
Crude Strength: Naphtha flat prices are tracking the broader rally in the energy complex.
Supply/Demand Fundamentals:
Inventory: European stocks are relatively tight, helping to support the prompt market structure.
Asian Demand: Buying interest remains visible despite the negative margin environment, suggesting a baseline level of consumption.
5.4 Naphtha Price Actions
Singapore Window
The market was balanced, with MOPJ flat price trading at $598.75/mt. MOPJ cracks found value at -$1.10/bbl in March. Spreads were in buy-side mode, with Jun/Aug trading at $9.25/mt. The East-West spread traded rangebound in March at $37.75/mt but saw buying interest further out in Q3 at $32/mt. Naphtha cracks saw buying interest for size at -$5.55/bbl in April.
European Window
The market closed bid with flat price at $560.25/mt. Naphtha cracks were well bid, rising from -$5.40/bbl to -$5.15/bbl. Spreads remained on the buy-side, with significant interest in Sep/Oct at $1.25/mt. The East-West spread weakened slightly to $37/mt in the front. MOPJ cracks were thin but found value at -$1.3/bbl pre-window before strengthening to -$1.07/bbl.
5.5 LPG/NGLs
Synthesis
The LPG market is characterized by a firming trend in Asia, driven by buying interest from refiners and petrochemical producers. The FEI (Far East Index) flat price has been well supported, although prompt spreads have shown some weakness. In the US, the market is digesting the impact of recent weather events and inventory draws. The arbitrage window from the US to Asia is being closely watched, with some strengthening seen in the prompt arbitrage spread due to FEI weakness.
Key Themes
Asian Demand: Buying interest from Chinese refiners and PDH operators is supporting the Asian market, particularly for March/April delivery.
Arbitrage Dynamics: The US-Asia arbitrage is fluctuating, with recent strengthening driven by relative weakness in the FEI.
US Supply: US export availability remains a key variable, with high domestic consumption potentially limiting spot cargoes.
Key Market Drivers:
Petchem Buying: Chinese trade buying interest in Q4 FEI/MOPJ suggests long-term demand planning.
Freight: Freight rates are playing a crucial role in determining arbitrage economics.
Supply/Demand Fundamentals:
Asian Spreads: FEI spreads have rallied, with March/April trading up to $29/mt, indicating near-term tightness.
CP Market: The Saudi CP market is seeing buying interest for April flat price, signaling steady demand for Middle Eastern barrels.
5.6 LPG/NGLs Price Actions
Singapore Window
The March arb sold off from -$205/mt to -$214/mt, while FEI flat price remained supported. Prompt FEI spreads rallied, with March/April hitting highs of $29/mt. The FEI/CP spread strengthened on the back of FEI strength, with March valued at $15/mt. The 2H Europe arb saw buying interest at -$98/mt.
European Window
Activity was quiet. LST spreads were slightly softer, with March/April trading down to 0.25c/gal. There was buy-side interest in FEI/MOPJs, with trade buying March FEI/MOPJ. The C4/C3 spread strengthened slightly with more buying interest in March.
5.7 Gasoline/Mogas
Synthesis
The gasoline market is mixed, with strength in the Singapore 92 RON market contrasting with a weaker European EBOB market. In Asia, cracks have rallied, supported by a constructive view on regional demand and potential supply tightness. In Europe, the market is better offered, with cracks trading down and summer spreads getting sold. The US market is rangebound, with some strength seen in the RBOB complex.
Key Themes
Asian Strength: The rally in Singapore 92 RON cracks suggests a tightening regional balance, possibly due to refinery maintenance or strong demand.
European Weakness: The sell-off in EBOB cracks and spreads indicates a well-supplied market in Europe, with summer demand not yet fully priced in.
Arbitrage: The East-West spread has been mixed, reflecting the divergent regional trends.
Key Market Drivers:
Regional Demand: Stronger demand in Asia is supporting the 92 RON market, while European demand remains lackluster.
Refinery Runs: High refinery utilization in Europe may be contributing to the supply overhang.
Supply/Demand Fundamentals:
Singapore Cracks: 92 RON cracks traded up from $8.45/bbl to $8.95/bbl in March, signaling strength.
EBOB Cracks: Front cracks traded down from $12.25/bbl to $11.95/bbl, reflecting weakness.
5.8 Petrochemicals
Synthesis
The petrochemical sector is navigating a complex environment of rising feedstock costs and mixed downstream demand. In Asia, buying interest for naphtha suggests steady cracker run rates, but margins remain under pressure. In the US, the focus is on the interplay between natural gas prices and ethane feedstocks. The broader market is also reacting to the rally in crude prices, which is pushing up the cost floor for petrochemicals.
Key Themes
Cost Push: Rising crude and naphtha prices are increasing production costs for petrochemical producers.
Margin Compression: Producers are facing squeezed margins, particularly in the ethylene chain, as product prices lag behind feedstock costs.
Demand Uncertainty: While there is some buying interest, overall downstream demand remains fragile due to global economic uncertainties.
Key Market Drivers:
Feedstock Rally: The strength in the energy complex is the primary driver of higher petrochemical prices.
Economic Data: Strong US consumer sentiment provides a glimmer of hope for downstream demand recovery.
Supply/Demand Fundamentals:
Asian Buying: End-users in Asia are securing naphtha cargoes, indicating a baseline level of demand.
European Supply: The European market is relatively balanced, but rising costs are a concern for producers.
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