Oil & Gas | Sector Update Feb 4

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Maintain NEUTRAL: Midstream Resilience Amid Volatile Commodities

Brent crude prices staged a modest, sentiment-driven rebound in January 2026, briefly touching USD70 per barrel before settling into a range-bound pattern between USD60–70. The movement underscores ongoing uncertainty, with macroeconomic sentiment rather than fundamentals driving short-term price action.

Oil & Gas – sentiment-driven rebound

Natural gas markets saw sharp swings, surging above USD7.40 per MMBtu to a two-year high on cold-weather supply constraints, before swiftly retracing to around USD3.20 as conditions normalized. The volatility highlights the sector’s sensitivity to weather-driven demand shocks and supply bottlenecks.

Meanwhile, dirty tanker rates continued to outperform, surpassing the 1,700 mark and reaching a two-year high. Geopolitical instability, extended shipping routes, rising insurance costs, and increased tonne-mile demand have all contributed to sustained strength in freight markets, offering a rare bright spot in the broader energy complex.

Volatility

“Against this backdrop, we maintain a NEUTRAL stance on the Oil & Gas sector. While commodity-linked segments remain exposed to volatility, we see relative resilience in the midstream space, where defensive cash flows and limited direct commodity price exposure provide stability,” MBSB.

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