October typically isn't a 'crunch month' for fuel demand - 'unless you are dealing with major elections, says chief energy adviser

French President Emmanuel Macron, right, walks with other officials from France to Trump Tower in New York City on Sept. 21, ahead of a meeting with President Donald Trump.

European leaders agreed Friday to a rapid release of some diesel stockpiles, pulling prices of oil down as much as 5% on Friday, following pressure from the Trump administration.

The White House floated the idea of temporarily banning U.S. exports of diesel, a fuel that in late September saw prices climb to a record high of about $6.50 a gallon domestically. The surge in fuel costs has been a hot-button issue as the U.S. midterm elections loom in about a month.

The average price for diesel was at $6.37 a gallon on Friday, according to AAA.

The Group of Seven announced Friday that it plans to release 100 million barrels of refined products over the next four months in coordination with the International Energy Agency. The move will include a "substantial" release of diesel within the first 20 days by G-7 members and partners, the group of advanced economies said in a statement.

The move to release the fuel stocks is "significant," said Patrick De Haan, head of petroleum analysis at GasBuddy. "It could temporarily help push prices down here for gasoline and diesel," ahead of the U.S. midterm elections in November.

On Truth Social, President Donald Trump said, "Europe has just agreed to release a massive amount of their heavily stocked Diesel Oil," adding that the process would begin immediately.

Still, the amount of the release is less significant than understanding whether this is truly "strategic," or actual additional supply - or if it is merely shifting inventories from one column to another, De Haan told MarketWatch by email.

Tom Kloza, chief energy adviser at Gulf Oil, said it's very hard to get a thorough understanding of European "strategic" stocks of oil. That's because, unlike stocks in the U.S. Strategic Petroleum Reserve, which are held in underground salt domes, the "diesel designated 'strategic' in Europe comes from generally circulated commercial inventory," he said.

So, "under some circumstances, one can look at a 'release' as a simple transfer from one pocket to the next," said Kloza.

Furthermore, October typically isn't a "crunch month" for fuel demand - "unless you are dealing with major elections," said Kloza.

"The real crunch time comes with winter - Europeans need to hope that the super El Nino leads to warmer-than-normal temperatures so that gasoil demand is limited in December through March," he added.

'Pacifying' Trump?

Oil prices had been falling before the Friday diesel-release announcement out of Europe, and losses briefly intensified after it. November West Texas Intermediate crude (CLX26) (CL.1), the U.S. benchmark, fell to as low as $88.06 a barrel during Friday's session, the lowest intraday level since Sept. 1, according to data from FactSet. It was last down 1.7% at $91.32 a barrel. Global benchmark Brent crude saw its December contract (BRNZ26) fall 1% to $101.34.

The November contract for ultralow sulfur diesel, also referred to heating oil (HOX26), lost 3.2% to $4.49 a gallon, after touching a low of $4.38, the lowest since Aug. 28.

For the moment, the release will "pacify Trump now that Europe, namely France and Germany, are going to be pitching in," said Denton Cinquegrana, chief oil analyst at Dow Jones Energy. That makes sense as those two countries have some of the higher strategic reserves in the European Union, he told MarketWatch. (Dow Jones Energy is a unit of Dow Jones, the publisher of MarketWatch.)

The 27 countries that are part of the European Union had about 39 million metric tons of gasoil and diesel oil as of May 2025, equivalent to about 290 million barrels, in its emergency reserves, according to data from Eurostat.

Michael Lynch, president at Strategic Energy & Economic Research, said the diesel release won't likely help Asian markets very quickly. Supplies will be rerouted, but will take a few weeks to have the full impact, and they will "offset the Chinese decision to ban products this month."

'Direct relief'

Diesel prices in Europe, meanwhile, should see more direct relief than in the U.S., said Rebecca Babin, a senior energy trader and managing director at CIBC Private Wealth, adding that the U.S. supplied about 41% of Europe's diesel imports in September.

If the reserve releases reduce Europe's pull on those cargoes, that eases pressure on U.S. supplies and "compresses diesel prices and refining margins," she told MarketWatch by email.

And if U.S. refiners aren't so pressured to maximize diesel output, they may have more incentive to shift their production mix toward gasoline, helping to lower prices for gasoline, said Babin.

At the same time, releasing more diesel into the market can reduce refiners' incentive to process more crude, she said. That appears to offer a "relief valve" for prices and could take some pressure off calls for a U.S. diesel export ban, said Babin.

Ahead of the G-7's announcement Friday, Jarret Renshaw, a White House reporter for Reuters, wrote on X that as Washington was pressuring Europe to release emergency fuel inventories, the White House also was preparing an executive order that aims to ease record-high diesel prices. He said the order could be unveiled as early as next week and may include measures to expand the use of tax-exempt red-dyed diesel and other tax changes, citing two people familiar with the process.

A request for comment from the White House wasn't immediately answered.

In the long term, however, the diesel market needs global refining capacity to expand as well as Russian diesel exports to resume, said Rob Thummel, senior portfolio manager at Tortoise Capital. "Lower oil prices will help to reduce diesel prices, but higher diesel production and increased diesel inventories would have a bigger impact on reducing diesel prices over the longer term."

For now, the reaction in the oil and oil-product market has eased, with prices off Friday's session lows.

"The market is pricing in short-term relief across the complex, but its durability will depend on how quickly the barrels arrive and whether underlying supply conditions improve," Babin said.

Victor Reklaitis, Claudia Assis and Robert Schroeder contributed.

-Myra P. Saefong