Daily Oil & Petrochemical Market Report: 06 February 2026
5.1 Crude/Brent
Synthesis
Crude oil prices posted a modest recovery, with WTI settling above $63/bbl and Brent climbing over $68/bbl, as market participants digested the outcomes of US-Iran diplomatic talks in Oman. While the discussions ended without a concrete agreement, the dialogue was described as a "good start" and a "positive" step, helping to ease immediate fears of military escalation that had previously injected a significant risk premium into prices. However, a residual geopolitical risk premium remains embedded in the market as traders remain cautious about the long-term resolution of tensions, particularly given Iran's steadfast stance on nuclear enrichment. Adding to the complex geopolitical landscape, the EU announced plans for a full maritime services ban on Russian crude, aiming to further squeeze Moscow's energy revenues and complicating global trade flows. Physically, the market is witnessing a reshaping of trade routes, with US-facilitated sales of Venezuelan crude commanding higher prices than before, and India committing to significant purchases of US energy products as part of a broader trade deal. These shifting dynamics are creating new competition for traditional suppliers, particularly for Canadian heavy crude producers who are seeing their barrels discounted due to the influx of Venezuelan sour crude into the US Gulf Coast.
Key Themes
Geopolitical Risk: The US-Iran talks and the potential for military escalation remain the primary drivers of short-term price volatility, with markets reacting sensitively to any diplomatic signals.
Sanctions & Trade Policy: New EU sanctions on Russian maritime services and the US facilitation of Venezuelan crude sales are reshaping global oil flows, creating both opportunities and challenges for producers.
Supply Dynamics: OPEC+ production cuts and the lack of immediate additional supply from the group are supporting prices, despite concerns over long-term oversupply from non-OPEC+ sources like the US and Guyana.
Demand Signals: Saudi Arabia's decision to cut official selling prices for Asia less than expected signals confidence in regional demand, even as prices reach multi-year lows.
5.2 Crude Price Actions
Market Highlights
WTI crude futures settled higher, with the March contract rising $0.26 to $63.55/bbl and April Brent climbing $0.54 to $68.09/bbl. The WTI/Brent spread narrowed slightly to a $4.16/bbl discount. In the physical market, WTI at Magellan East Houston traded at a $1.05/bbl premium to WTI, while WTI Midland was assessed at a 75-cent premium. Canadian heavy crude differentials weakened due to increased competition from Venezuelan barrels, with WCS Hardisty slipping to a $15.35/bbl discount to the WTI CMA. In the North Sea, Dated Brent differentials strengthened, with WTI Midland cargoes trading at premiums around $3.45/bbl over Dated Brent.
5.3 Naphtha
Synthesis
The naphtha market is tightening, particularly in Asia, driven by a combination of slowing arbitrage inflows and strong demand. US naphtha exports to Asia plummeted in January as supplies were diverted to Venezuela to serve as diluent for heavy crude production. This shift, coupled with weather-related loading delays in the Mediterranean, has created a looming supply shock for Asian buyers. In response, spot premiums have surged, with Indian sellers achieving significantly higher prices for March-loading cargoes.
Key Themes
Arbitrage Disruption: The diversion of US naphtha to Venezuela and Mediterranean loading delays are severely restricting flows to Asia.
Supply Tightness: Asian markets are bracing for a shortage, particularly of heavy and full-range grades, driving up physical premiums and time spreads.
Demand Pull: Despite the supply crunch, buying interest remains robust, fueled partly by short-covering.
5.4 Naphtha Price Actions
Market Highlights
Japan's naphtha price indicators surged, with the front-forward month swap spread hitting an 11-month high of over $10/t in backwardation. The Japan c+f naphtha price against ICE Brent rose to $90/t. Open-spec naphtha prices for second-half March delivery rose to $610.75-611.25/mt. In the paper market, the April Brent/H1 April naphtha spread narrowed to $93.00/mt.
5.5 LPG/NGLs
Synthesis
The LPG market is grappling with high freight rates that are dampening arbitrage economics and weighing on FOB prices in the Middle East. Propane and butane prices for March loading in the Middle East slid as buyers shied away from high freight costs. In Asia, the market is mixed; propane prices for March delivery to South China rose slightly, while the CFR North Asia market saw prices rise on keen bidding interest. The US market remains quiet with prices showing little movement.
Key Themes
Freight Costs: Soaring freight rates are the dominant bearish factor for Middle East FOB prices, making exports to Asia less competitive.
Regional Divergence: Asian delivered prices are finding some support from buying interest, while Middle East FOB levels are under pressure.
Chinese Demand: Chinese PDH plant operators are active in the market, with run rates recovering to around 63%.
5.6 LPG/NGLs Price Actions
Market Highlights
Middle East propane and butane for March loading fell to a discount of $18-20/mt to the March CP. CFR North Asia propane cargoes rose to $596.50/mt. In the US, FOB Gulf Coast propane prices for March loading slid to $380-386/mt. The CFR North Asia propane-butane spread was assessed at minus $17/mt.
5.7 Gasoline/Mogas
Synthesis
The Asian gasoline market is rangebound, supported by falling Chinese exports but capped by ample regional supplies, particularly from South Korea. Chinese gasoline exports to Singapore dropped to zero in early February, and overall February exports from China are expected to be low due to domestic demand. However, South Korean exports surged, adding to the regional overhang. In the US, West Coast differentials rose amid refinery turnarounds, while Gulf Coast markets remained under pressure.
Key Themes
Chinese Exports: A sharp drop in Chinese exports is a key supportive factor for the Asian market, though this is partially offset by high Korean volumes.
Regional Supply: Singapore light distillate stocks hit a three-year high, reflecting the supply overhang.
US Refining Issues: Refinery turnarounds on the US West Coast are tightening local supply and boosting premiums.
5.8 Petrochemicals
Synthesis
The petrochemical sector continues to face headwinds from weak margins and ample supply. Asian ethylene prices remain under pressure, with the spread to naphtha narrowing to record lows, well below breakeven levels for most producers. This poor profitability is leading to extended turnarounds, such as PTTGC pushing back the restart of its cracker in Thailand. Despite this, some producers are maintaining high run rates, supported by firm propylene and butadiene prices. In aromatics, Asian paraxylene prices tracked upstream gains, while the Indian styrene market remained stable amid tight supplies.
Key Themes
Margin Squeeze: Ethylene-naphtha spreads are at record lows, pressuring cracker economics and forcing some maintenance extensions.
Supply Adjustments: Producers are managing supply through turnarounds and run rate adjustments, though overall supply remains sufficient.
Product Divergence: While ethylene struggles, propylene and butadiene markets are seeing more support.
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