October Pricing Analysis - European Gasoil

Summary

ULSD 10ppm NWE CIF Cargoes averaged $1,474/mt in October, 1.6% below September, but the flat price masked a diesel-specific sell-off: the CIF crack against Brent futures fell from $95.75/bbl (open) to $85.76/bbl (close) while the flat price rose $43.50/mt over the same span. The G7 commitment to release up to 100m bbl of diesel and crude took $94/mt off the price on 2 October and drained the bullishness from physical wholesale. The MED CIF premium to NWE flipped from +$18.77/mt to −$6.36/mt, assessed-vs-implied averaged negative on all three ULSD legs (putting physical below paper), and physical barges turned offer-led as TOTSA joined Shell on the sell side. Crude carried the second half as Gulf tanker attacks escalated, while freight kept every import arb into Europe shut and the NWE premium to MEG closed at +$302/mt. The LSGO front rebuilt from +$37.25/mt after the 12 October roll to +$66.75/mt at month-end as November balances tightened. November turns on strategic barrels landing mostly in the second half of the month, set against shut arbs and a Russian producer export ban now extended to end-January.

Price trends

ULSD CIF NWE rose every week after the 2 October release shock; average down 1.6%, close up $43.50/mt

• Opened $1,471.50/mt, closed $1,515.00/mt; average $1,474.44/mt vs September's $1,498.93/mt (−1.6% MoM) and October 2025's $690.90/mt (+113.4% YoY)
• Low $1,347.00/mt (6 Oct), high $1,562.25/mt (26 Oct); range $215.25/mt vs $204.00/mt in September, so the level reset but the price regime held
• 2 Oct: −$94.00/mt (−6.4%) as the stock release hit the market; 7 Oct recovered $82.75/mt off the low, so the release repriced the level without starting a downtrend

Cross-commodity dynamics

MED flipped to a discount and physical priced below paper on all three ULSD legs

• MED minus NWE CIF fell from +$18.77/mt (September average) to −$6.36/mt, closing at −$11.00/mt (low −$28.25/mt, 28 Oct). The import-dependent MED leg gave back its premium first, as the stock release weighed on European and MED values and recovering Russian diesel exports pointed cargoes toward the Med
• MED CIF diff to LSGO halved from +$52.43/mt to +$25.33/mt, while NWE CIF held at +$31.69/mt (September +$33.66/mt); the sell-off was a MED story
• Assessed vs implied averaged −$0.76/mt (NWE CIF), −$2.42/mt (MED CIF, from +$6.09/mt) and −$9.21/mt (barges), with all three hitting lows of −$39 to −$42/mt on 8–9 Oct; physical traded below paper as the bullishness left the wholesale market
• The cargo-barge spread widened from +$17.52/mt to +$24.93/mt (widest +$39.00/mt, 19 Oct); imported cargoes held value better than domestic barges while import arbs stayed shut
• Gasoil 0.1% barges widened their discount to ULSD barges from −$43.65/mt to −$70.17/mt; the heating grade took no share of any winter bid

Market activity

Offers overtook bids in physical barges, NWE cargo diff swaps nearly doubled, and MED bidding fell on both legs

Physical

• ULSD barges:
  • Offer-led: 280 bids vs 378 offers (September 365 vs 277); trades fell from 185 to 154
  • Shell remained the anchor seller (74 trades, from 100); TOTSA arrived as a new seller at 22; this is integrated-major selling, i.e. flow
  • Intermediaries took the other side: Vitol 71, Trafigura 25, Glencore 24; EXTAP added 20 buys
• 50ppm barges:
  • The market opened on the sell side: 18 offers vs 2 bids, and 6 trades from none in September
  • TOTSA was the only seller; Vitol took 3 of the 6 trades
• ULSD NWE cargoes:
  • Bids held at 85 while offers rose from 12 to 30; trades rose from 3 to 9, still a thin window
  • This was the only physical market where buyers kept their September pace, in line with the wider cargo-barge spread while import arbs stayed shut
• ULSD MED cargoes:
  • Bids halved from 164 to 78, and offers fell from 36 to 15
  • No trades printed, after 2 in September; buyers stepped back from the market that repriced to a discount

Derivatives

• ULSD CIF NWE vs LSGO diff (month and balmo):
  • Trades nearly doubled from 43 to 78 while bids fell from 190 to 109; activity moved from bidding to dealing
  • TOTSA sold 29 times, an integrated major hedging the cargo premium on paper; Vitol bought 53, which is intermediary positioning
  • Mercuria, September's top seller (11 trades), dropped out of the top four
• ULSD CIF MED vs LSGO diff (month and balmo):
  • Bids fell from 165 to 109 against steady offers (107 vs 101); the bid lead disappeared and trades eased from 29 to 22
  • ADNOC led selling with 11 trades, producer-trader selling on paper; Glencore Commodities replaced Vitol as top buyer (8 vs Vitol's 5, down from 17)
• ULSD FOB ARA barge vs LSGO diff:
  • Thin and quieter: 20 bids, 12 offers and 1 trade (September 32, 18, 5)

Cross-market dynamics

CIF crack fell $10/bbl open-to-close while flat price rose; crude led, diesel lagged

• NWE CIF crack averaged $89.86/bbl vs $98.90/bbl in September; its high of $96.02/bbl (8 Oct) never revisited September's $98.90/bbl average after the release
• MED CIF crack fell harder, from $101.42/bbl to $89.00/bbl, closing at $84.28/bbl, below NWE
• Flat price rose $43.50/mt against a $10/bbl crack fall, so Brent did the lifting; Gulf tanker attacks hit a wartime weekly high and Middle East crude exports fell to 11.9 mb/d from 15 mb/d (S&P Global)

Cross-regional dynamics

Freight shut every arb into Europe; NWE premium to MEG closed at +$302/mt

• NWE CIF over Singapore 10ppm averaged +$185.23/mt (September +$172.45/mt), closing at +$249.92/mt; NWE over MEG averaged +$239.20/mt (+$214.01/mt), closing at +$302.42/mt
• The wide spreads reflect a freight wall, not an open arb: MEG gasoil exports collapsed to 72 kbd from 205 kbd, with no cargo since 9 Oct, and import arbs into Europe stayed shut as USGC-UKC freight hit its highest since April (Kpler)
• USGC ULSD stayed above NWE (average −$27.19/mt); US exports to Europe halved to 160 kbd from 298 kbd (Kpler), with US distillate stocks at their lowest seasonal level in over a decade (S&P Global)

Curve structure

Paper front re-tightened after the roll while physical prompt structure softened

• M1-M2 averaged +$51.57/mt vs +$72.39/mt in September; it dropped to +$37.25/mt on the 12 Oct roll, then rebuilt to +$66.75/mt as the NWE November deficit deepened to 110 kbd (Kpler)
• The November contract gained $81.75/mt over the month, in step with M12's +$71.25/mt; the curve lifted close to parallel, and the M1-M12 narrowing reflects the October contract rolling off at a premium
• Half Daily Structure softened on all three ULSD legs (NWE CIF −$2.37/mt to −$1.60/mt; MED −$2.48/mt to −$1.58/mt; barges −$2.10/mt to −$1.23/mt): physical backwardation eased while paper backwardation rebuilt

Price volatility

October CV of 3.35% was the lowest in six months

• CV has fallen every month since July's 12.14% peak; MED CIF compressed most, to 2.96%
• The −$94/mt release session sits inside a 3.35% month; risk has moved from trend to discrete events (barrel deliveries, Russian export rulings), so hedges sized to the summer's 9–12% regime overstate current exposure

Something to watch

• Strategic barrels landing:
  • Observation: the G7 release is up to 100m bbl over four months; Spain is releasing 4.4m bbl of diesel in October, France 10m bbl from November, and Germany 16m bbl with timing unclear (Kpler)
  • Why it matters: barrels landing in the second half of November meet a front at +$66.75/mt; on-schedule delivery compresses M1-M2 and the MED diff, while slippage re-tightens both
  • What to monitor: national stockholding agency release notices; daily LSGO M1-M2 close; MED CIF diff to LSGO
• Russian diesel into the Med:
  • Observation: weekly Russian diesel exports recovered to 379 kb/d from 149 kb/d in mid-October (S&P Global), while the producer export ban was extended to 31 January 2027 on 31 October
  • Why it matters: Russian cargoes are the swing supply behind the MED discount; a fall back toward mid-October levels would rebuild the MED premium
  • What to monitor: weekly Russian diesel loadings (Kpler); MED minus NWE CIF spread; MED cargo bids in the window
• First arb to reopen:
  • Observation: WCI to Med sits within $4/t of opening, while the transatlantic arb stays shut on freight (Kpler)
  • Why it matters: WCI barrels into the Med would add MED supply first and start compressing the +$302/mt NWE premium to MEG
  • What to monitor: LR2 WCI rates; MR USGC-UKC freight; MEG gasoil export loadings

Note: All figures, prices and market activity referenced in this report are based on the period 1 to 30 October 2026.