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January 2026 opened with sharply contrasting market signals. While 2025 ended under the weight of oversupply concerns and falling prices, the new year quickly introduced renewed volatility driven by geopolitical risk premiums, winter demand dynamics, and tightening near-term crude balances. Across crude, products, and storage economics, January revealed a market caught between structural surplus expectations for 2026 and short-term disruptions that continue to support prices. For tank terminals, the month reinforced the importance of flexibility in an environment where sentiment can shift rapidly.

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1. Crude Markets: Strong Monthly Rally Masks Structural Weakness

Brent crude staged a notable recovery during January, rising from around $61/bbl at the start of the month to $70.71/bbl by the end, marking its strongest monthly gain since January 2022. This rally was largely risk-driven, supported by escalating tensions between the US and Iran, rising military presence in the Middle East, and fears of disruption through the Strait of Hormuz, a key route for roughly 20% of global crude flows.

Despite this sharp move higher, underlying fundamentals remain fragile. Oversupply expectations for 2026 persist, with OPEC+ production increases still looming and global supply forecast to outpace demand once geopolitical risk premiums ease. This duality was reflected in the Brent forward curve, which stayed firmly in backwardation, but with spreads that are increasingly sensitive to sentiment rather than physical tightness.

Takeaway: The crude rally increased throughput incentives and short-term activity but did not materially change the longer-term outlook for storage demand.

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2. Forward Curves: Backwardation Deepens on Risk, Not Fundamentals

January forward curves steepened sharply following the rise in spot prices. Middle distillates and crude showed stronger backwardation across the front of the curve, driven primarily by geopolitical uncertainty rather than tightening physical balances.

Key observations include:

• Gasoil and jet fuel curves steepened as markets assessed the impact of sanctions on Russian product flows and potential supply disruptions.

• Gasoline (RBOB) remained in contango across most tenors, reflecting seasonal demand softness and expectations of higher exports later in the year.

• Fuel oil contango weakened, particularly in ARA, as lower export activity and reduced arbitrage opportunities led to declining stock levels.

Takeaway: Curve steepening increased prompt trading activity but continues to limit structural storage opportunities.

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3. Storage Economics: Negative Across the Board, With Few Exceptions

Break-even (BE) storage rates throughout January remained predominantly negative, confirming that storage economics are still unattractive for most products.

Key BE signals:

• LS gasoil and jet fuel: deeply negative across all tenors, reflecting strong backwardation.

• Gasoline (RBOB/EBOB): short-term BE rates briefly turned positive, but longer tenors remained negative.

• Fuel oil (HSFO/LSFO): hovered close to zero, representing the least negative segment but still insufficient to support large-scale storage plays.

Negative BE values indicate that forward prices do not compensate for storage costs, even under improved financing assumptions. Compared to late 2025, January showed marginal improvement, but not enough to materially change tank utilization strategies.

Takeaway: Storage remains largely throughput-driven, with limited incentive for long-term stockholding.

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4. Product Cracks: Broad Weakness Despite Higher Crude Prices

Product crack spreads came under pressure during January as crude prices outpaced product markets. This resulted in a broad weakening of refinery margins, particularly in Northwest Europe.

Key developments include:

• Diesel and gasoil cracks declined further on ample supply and fading inland demand.
• Gasoline cracks weakened despite higher blending activity, as local demand remained subdued.
• Jet fuel cracks stayed relatively elevated but showed signs of topping out.
• Fuel oil cracks remained negative, though slightly less pressured than earlier months.

European refinery margins deteriorated, with Brent cracking margins moving toward breakeven and hydro skimming margins firmly negative. This reduced refinery run incentives and contributed to calmer product flows later in the month.

Takeaway: Softer cracks translated into more predictable flows and fewer abrupt inventory swings.

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5. Global Stocks: Mixed Trends, ARA Remains Well Supplied

Global oil stock data for January highlights diverging regional trends:

• US Gulf Coast: light ends and middle distillates trended higher, supported by mild winter demand and strong production.

• ARA: overall stocks remained rather comfortable, with light ends stable, middle distillates slightly declining, and heavy products broadly flat.

• Singapore: heavy and light-end stocks rose, pointing to weaker regional demand.

• Fujairah: stocks declined across several product groups, reflecting tighter barge scheduling and reduced inflows.

From an ARA standpoint, inventory levels did not indicate stress. Instead, stocks remained within historical ranges, reinforcing the view that supply availability is currently adequate despite elevated prices.

Takeaway: Stock stability supports continued hub relevance, but without triggering storage-driven congestion.

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Conclusion

January 2026 demonstrated how quickly market sentiment can shift when geopolitical risks collide with structurally oversupplied fundamentals. While crude prices rallied sharply and backwardation intensified, these moves were largely driven by risk premiums rather than tightening physical balances. Storage economics remained negative across most products, refinery margins weakened, and ARA stock levels stayed broadly comfortable. For tank terminals, January reinforced a familiar theme: operational focus remains firmly on throughput and flexibility rather than long-term storage plays. As the year progresses, the key question will be whether geopolitical tensions continue to support prices, or whether underlying oversupply ultimately reasserts itself and reshapes market dynamics later in 2026.

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