European gasoil supplies remained tight during October despite refiners increasing middle distillate yields, according to Alkagesta Newsroom’s market outlook dated 21 October 2026. The assessment linked volatile prices and firm physical differentials in Northwest Europe and the Mediterranean to low inventories and disrupted inland transport, with Rhine restrictions hampering deliveries to Germany and Switzerland.
Alkagesta reported water-level readings at Kaub of just 1–2 cm on 6 and 8 October, subsequently ranging around 7–18 cm. The restrictions prevented barges from loading normally and left inland distributors dependent on more expensive rail and pipeline logistics. Buyers largely limited purchases to immediate requirements. Barge differentials for 50 ppm gasoil, used as heating oil in Germany and Switzerland, moved from a $26.75/mt discount to front-month ICE Low Sulphur Gasoil futures early in October to a $10.75/mt premium by mid-month.
Inventory cover provided little protection against delivery interruptions. The outlook put ARA middle distillate stocks at 2.255 million mt, 20% below the five-year average, while gasoil and diesel stocks totalled 1.664 million mt, down 21% year on year. The middle distillate deficit had nevertheless narrowed from the 25% shortfall and 2.108 million mt recorded in Alkagesta’s earlier European ULSD assessment.
Seaborne supply patterns also shifted. Alkagesta said middle distillate shortages east of Suez and low European stocks drew US Gulf Coast gasoil cargoes towards Northwest Europe and Mediterranean ports. MR1 utilisation increased on US Gulf Coast routes to the UK/Continent and Brazil. Meanwhile, clean-product volumes transported on LR2 tankers fell 28% year on year to 2.1 million b/d in the first nine months of 2026, and Persian Gulf clean-product exports declined to 2 million b/d from 3.7 million b/d in 2025.
Freight costs rose sharply: Arab Gulf-to-UK/Continent LR1 rates averaged $156.01/mt in September before reaching $220.77/mt on 19 October, compared with $46.41/mt a year earlier, the outlook said. Looking ahead, Alkagesta expects secondary refinery maintenance to constrain further middle distillate yield gains. It also anticipates deferred heating-oil purchases in Germany and Switzerland translating into concentrated spot demand as temperatures fall, while Rhine restrictions persist until sustained rainfall. These forecasts reflect Alkagesta’s assessment rather than assured outcomes.