Crude Oil Rally: Brent & WTI Soar on Strong Demand, Weather Risks Loom

The crude oil market has mounted a robust rally, with both Brent and WTI benchmarks surging over 2% in the latest trading session. Strong demand indicators, a tightening global supply environment, and weather-related risks in key producing regions have reinvigorated bullish sentiment. ICE Brent contracts saw front-month (Feb 2026) prices close at $60.62/bbl, up an impressive $1.70 (+2.8%) from the previous session, while NYMEX WTI February 2026 ended at $56.73/bbl, climbing $1.60 (+2.82%). This upward movement marks a clear reversal from the more languid trend seen in the last report, aided by signs of robust global demand and OPEC+ supply discipline. However, uncertainties linger: geopolitical tensions, forecasts of colder-than-average weather in North America, and fluctuating inventories continue to inject volatility into the market. As winter demand for heating fuels approaches its peak and refinery margins remain robust, the focus now shifts to global production dynamics, speculative positioning, and evolving weather patterns. With these factors in play, traders and industry participants must stay alert for abrupt shifts, but the short-term outlook appears firmly constructive with potential for further upside over the next week.

📈 Prices & Exchange Overview

Contract	ICE Brent (USD/bbl)	% Change	NYMEX WTI (USD/bbl)	% Change	Sentiment
Feb 26	60.62	+2.80%	56.73	+2.82%	Strong Bullish
Mar 26	60.31	+2.72%	56.58	+2.70%	Bullish
Apr 26	60.13	+2.59%	56.50	+2.55%	Bullish
May 26	60.06	+2.45%	56.52	+2.46%	Bullish

All prices USD/bbl. Short-dated contracts saw the sharpest gains, with backwardation evident across the curve.

🌍 Supply & Demand Drivers

• OPEC+ Output Discipline: Supply constraints remain in force, with OPEC+ maintaining production cuts amid strong compliance.
• Global Demand Recovery: Recent EIA and IEA estimates show year-over-year demand growth outpacing supply, particularly in Asia and North America.
• US Inventories: US crude stocks have declined for the third consecutive week, confirming robust refinery runs and strong export demand.
• Geopolitical Tensions: Middle East risks (notably in the Red Sea and Straits of Hormuz) provide a persistent risk premium.

📊 Fundamentals & Market Insights

• Speculative Positioning: Managed money net-long positions have increased, supporting the bullish direction.
• Refining Margins: Diesel (ICE Gasoil) future prices climbed nearly 3%, reflecting tight markets for middle distillates.
• Global Stock Levels: OECD inventories are now below their five-year average, intensifying bullish sentiments.
• Acreage & Production Forecasts: No major gains expected outside the US shale sector, with other producers sticking to current quotas.

🌦️ Weather Outlook

• North America: NOAA forecasts colder-than-average conditions for much of the US Midwest and Northeast, suggesting strong heating oil demand.
• Middle East: Seasonal conditions broadly supportive of output; no severe weather disruptions currently reported.
• Asia-Pacific: Normal weather patterns, but refinery outages in China due to maintenance may marginally boost product imports in January.

🌐 Global Production & Stock Comparison

Country/Region	Production (mb/d)	Inventories (mb)	Trend
US	13.1	415	↓
OPEC+	37.2	n.a.	↔︎
OECD (total)	29.6	2,708	↓
China	4.2	n.a.	↔︎

Source: Latest IEA & EIA reports

📆 Trading Outlook & Recommendations

• Bullish short-term: Maintain or build long positions; strong fundamental and technical signals underpin the market.
• Watch crack spreads: Diesel/gas oil margins support refinery utilisation and product demand.
• Monitor inventories: Further weekly draws would confirm underlying tightness.
• Weather watch: US cold snap could spike short-term prices further.
• Set trailing stops: Given high volatility, lock in profits on long positions.

🔮 3-Day Regional Price Forecast

Exchange	Front Month	Today	Day 1	Day 2	Day 3
ICE Brent	Feb 26	60.62 USD/bbl	61.10 USD/bbl	61.50 USD/bbl	62.00 USD/bbl
NYMEX WTI	Feb 26	56.73 USD/bbl	57.10 USD/bbl	57.40 USD/bbl	57.90 USD/bbl

Forecast summary: Ongoing strength in both benchmarks expected, driven by winter weather, strong demand, and continued bullish sentiment.