Europe Braces for Gasoil Demand Spike as Heating Season Approaches
Europe is entering the winter season with lower than usual heating gasoil inventories, increasing the risk of a short-term demand surge as consumers look to stock up for the cold weather.
In Germany, 7.5 million households still rely on gasoil to heat their homes. This year, many families have chosen to delay filling their storage tanks, as the wars in the Middle East and Russia sent fuel prices soaring.
Deliveries of non-road gasoil in Germany – which includes mostly heating fuel – plunged by 51% from March throughout August, according to Eurostat. Relative to the same six-month period of 2025, sales fell by 2.7 million mt, or 110,000 barrels/day.
Large domestic fuel tanks give European buyers an unusually high degree of flexibility to bring forward or push back heating oil purchases, adapting to prices and weather.
“In the short run, this can be amongst the world’s most price-responsive demand, and it appears that elevated pricing has severely depressed buying since March,” the International Energy Agency (IEA) noted in its latest monthly oil report.
Prices for 0.1% sulfur heating-grade gasoil in Northwest Europe (NWE) have averaged $1,160/metric ton since the start of March, up from $660/mt throughout 2025, according to OPIS data.
“With prices historically high, [consumers] have not filled those tanks as-per-normal. However, a normal-to-cold winter could trigger significant buying,” Morgan Stanley warned.
According to the bank, heating gasoil tank levels in Germany were at just 48% of capacity at the beginning of September, compared to a seasonal norm of 55-60%.
“The longer consumers delay refilling their stocks, the steeper will be the eventual acceleration in demand as those with low domestic stocks look to refill before the start of winter,” the IEA warned.
As a result, assuming average winter temperatures, the IEA estimates that Europe’s non-road gasoil deliveries will jump by 38%, or 330,000 b/d, during the fourth quarter of 2026, placing further strain on the wider middle distillates market.
Moreover, extremely low water levels on the Rhine river are disrupting inland fuel supply deliveries into parts of France, Germany and Switzerland. The drought has reduced barge tonnage intakes and, in some cases, precluded barge transit entirely.
“Several tank farms can no longer be supplied by inland waterway vessels, or only with very small quantities,” the German energy trade association said last week. “This has further increased the likelihood of temporary and regionally limited supply shortages.”
Meanwhile, milder weather may grant European consumers some respite, at least during the start of the winter. According to the European Centre for Medium-Range Weather Forecasts, temperatures are expected to be 1 to 2 degrees Celsius warmer than average through late October and early November in France, Germany, Switzerland and the Benelux.