Page 6 - Policy Economic Report - March 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Hedge funds and other money managers turned increasingly bullish over February, boosting their net
long positions, with total net length rising by 46%, m-o-m. The increase was more pronounced in ICE
Brent, where net long positions reached their highest level since April 2024. The expansion in net long
positions was accompanied by sizeable financial inflows, with money managers being net buyers of an
equivalent of 126 mb over the month. For a second consecutive month, money managers reduced a
substantial volume of short positions in both ICE Brent and NYMEX WTI, following the build-up of short
positions observed in 4Q25. The adjustment in positioning reflected stronger-than-expected physical
market fundamentals, supply disruptions, and elevated geopolitical risk perceptions. At the same time,
long positions increased sharply, contributing further to an expansion in overall net long positions.

Crude spot prices extended their gains in February, supported by firm physical market fundamentals.
Demand remained strong, particularly from Asia-Pacific buyers, while robust buying interest in March-
loading programmes lent support to spot prices in Northwest Europe. Higher refining margins in Europe
and on the US Gulf Coast (USGC) also contributed to stronger buying interest. Supply disruptions in
some regions further tightened spot market conditions, particularly in the Atlantic Basin. A slow
recovery in the Caspian region, alongside temporary disruptions in the US and North Africa due to
weather conditions, raised concerns over near-term supply availability. In addition, geopolitical
developments in several key producing regions contributed to elevated risk premiums. Spot crude prices
continued to trade at firm premiums relative to futures in February, although these premiums
narrowed, m-o-m, amid still-strong physical market conditions.

Natural Gas spot prices at the US Henry Hub benchmark averaged $3.62 per million British thermal units
(MMBtu) in February 2026. Henry Hub's natural gas prices dropped in February, after five consecutive
months of gains, falling by ~53%, m-o-m. Prices experienced a sharp correction as temperatures
normalized across the region in February following a cold snap the previous month, leading to a decline
in heating. Higher LNG exports, coupled with a decline in storage levels, limited downside pressure.
According to data from the US Energy Information Administration (EIA), average weekly natural gas
storage decreased by 29.0%, m-o-m, in February. Prices were down by ~14%, y-o-y.

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