SINGAPORE: Asia’s cash premiums for 380-cst high-sulphur fuel oil (HSFO) fell further on Wednesday, slumping to a multi-week low on weaker buying interests in the physical trade window, but traders expect the market to remain tight in coming weeks.

The cash differentials for 380-cst HSFO slipped to a premium of $6.91 per tonne to Singapore quotes, the lowest since March 21. They were at $9.21 per tonne a day earlier.

Meanwhile, cash premiums for Asia’s 0.5% VLSFO were at $17.83 a tonne to Singapore quotes on Wednesday, compared with $19.58 per barrel on Tuesday.

The front-month VLSFO crack climbed to $21.16 per barrel against Dubai crude during Asian trade on Wednesday, up from $21.09 per barrel in the previous session.

“Persistently strong gasoil cracks amid tight supply have continued to keep volumes away from the fuel oil blending pool, keeping the low-sulphur fuel oil market tight,” Refinitiv Oil Research analysts wrote in a note.

“Going forward into the second quarter, we expect fuel oil supply into East Asia to be affected by the overall tightened wider supply pool, which is expected to worsen should the EU completely ban all Russian oil.”

Fujairah Oil Industry Zone (FOIZ) inventories for heavy distillates and residues slipped 1.8%, or by 201,000 barrels, from the previous week to 11.1 million barrels (1.65 million tonnes) in the week ended May 9, data via S&P Global Commodity Insights showed.

Compared with year-ago levels, the weekly fuel oil inventories at FOIZ were about 15% lower. The weekly fuel oil stocks at FOIZ have averaged 10.4 million barrels so far this year, Reuters calculations showed.