Market Insights - 12th February 2026

Oil

Oil prices held in the high-$60s (Brent) and mid-$60s (WTI) through the week. Market swings have been driven by U.S.-Iran tensions and ongoing talks. Prices climbed midweek (Brent around $69.40 yesterday) on reports of a possible second U.S. carrier to the Gulf, and Trump's meetings with Netanyahu - factors that added a risk-premium despite no immediate deal. By the time of writing (February 12th), Brent has eased to about $68, giving back some gains after the IEA cut its 2026 demand forecast.

Fundamentals are still applying some downward pressure. Last week, U.S. crude inventories surged by 8.5 million barrels (to 429 million barrels), as production rebounded toward record levels. OPEC+ produces largely left output unchanged in Q1, and OPEC reported January crude output of 28.34 million bpd, slightly lower than December due to declines in Libya and Nigeria. Even so, supply appears plentiful, and the IEA now expects global supply to exceed demand by about 3.7 million bpd in 2026 (a 4% surplus). OPEC forecasts that demand for OPEC+ oil will be about 0.4 million bpd weaker in Q2 than in Q1. In this environment, Brent futures trade in mild contango, keeping prices below $70, despite some geopolitical tensions.

Gas

Natural gas prices have cooled after January's extreme cold weather. U.S. spot gas (Henry Hub) slid back to around $3.2-$3.5/MMBtu by early February, down sharply from the >$25 spike during the freeze. Similarly in Europe, TTF prices have come off their January peak; easing into the low-€30s on forecasts of milder winter weather. The January cold has also drawn down supplies (EU storage fell to 48%), but the recent milder outlook has reduced short-term demand.

In the U.S., production quickly recovered from the freeze, and U.S. storage remains relatively strong, though winter draws have been large. The IEA expects surging LNG exports to keep supply robust in 2026: Europe alone may import a record 185 bcm of LNG next year. In Europe, winter supply remains a concern but also an area of policy change: Russia's remaining pipeline exports via TurkStream rose in January even as the EU finalised plans to ban all Russian pipeline gas by 2027 and LNG by end of 2026. Overall, ample new LNG capacity (especially U.S. exports) and mild weather forecasts have eased tightness in the gas market.

Power

Electricity markets reflect high demand and policy pressures. In the U.S., demand is surging, with analysts reporting that U.S. power consumption is projected to grow by roughly 25% by 2030 due to data centre and industrial loads. Almost all of that growth is expected to be met by renewables: the IEA forecasts U.S. solar generation up 17% in 2026 relative to 2025, with wind also rising 7%.

In Europe, high power costs remain a major issue. Industry leaders have lobbied EU governments to cut energy prices, noting that expensive electricity (driven by gas-linked market rules, grid bottlenecks, taxes and the EU carbon price) is undermining competitiveness. European industries face power prices more than double those in the U.S. or China. The EU carbon allowance price itself eased 7% this week (to about €73/ton) after some leaders considered the idea of intervening in the market. Meanwhile, EU countries discuss grid improvements and subsidy changes, but there is no quick fix. Europe's "last plant sets the price" design (often a gas unit) keeps electricity expensive even as renewables share grows.

Metals

Metals are generally off their peaks after dramatic swings seen so far this year. Copper is traded back near $13,000/ton (down from a record $14,527/ton), and nickel, tin and other have given up chunks of their late-January gains.

Underlying fundamentals have cooled the rally. Traders have cited ample inventories and slowing demand in top consuming China ahead of Lunar New Year. Reuters notes that copper and iron ore were under pressure due to "high inventories" and subdued Chinese buying before the holiday. Precious metals (gold and silver) had likewise benefited from geopolitical risk and speculative flows, but fell back as risk sentiment improved and the dollar strengthened.

Biofuels

Bio markets are being shaped by policy developments on both sides of the Pacific. In the U.S., tax incentives for low-carbon fuels were clarified. Treasury issued proposed rules implementing a new $1.00/gal clean fuel tax credit for advanced biofuels (including biodiesel, ethanol and SAF), and finalised guidance on existing biofuel tax credits. Industry groups have praised the move as giving clarity to produces and encouraging feedstock use (notably soy and waste oils). These actions, along with expected finalisation of 2026 blending quotas in early March, aim to lock in strong biofuel blending targets (around 24 billion gallons) while easing previous refiners' restrictions on imports. U.S. corn used for ethanol and soybean oil for biodiesel saw renewed support from these policies.

Elsewhere, Indonesia (the world's largest palm oil biodiesel market) surprised markets by shelving its plan to move from B40 to B50 biodiesel this year. Officials noted technical/funding limits and decided to stay at 40% palm blend. The B50 scrapping was viewed as bearish for palm oil futures, as it reduces anticipated domestic demand.

In Europe, no new major policies have been announced this week, but industry remains focused on the EU's Renewable Energy Directive reforms and national mandates. Notably, Germany's recent draft biofuels law preserved the use of food-based biofuel feedstocks, a relief to oilseed markets, while phasing out palm oil credits by 2027.

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