SINGAPORE: Asia’s high sulphur fuel oil (HSFO) market eased on Wednesday, though expectations of steady feedstock demand this quarter limited declines.

Singapore’s spot 380-cst HSFO premium dipped to $7.50 a tonne, while the market’s front-month refining margin fell to a discount of $11.02 a barrel at the Asia close (0830 GMT).

Despite this, the hi-5 fuel oil spread continues to narrow further, reflecting a supported market for 380-cst HSFO. The spread, which is the price difference between 0.5% low-sulphur fuel oil and 380-cst HSFO, fell day-on-day to $122 a tonne on Wednesday.

Total fuel oil supplies to Asia were pegged at 5.33 million tonnes for April, higher from March, based on Refinitiv Oil Research this week. The flows continued to be dominated by Russian fuel oil, which accounted for more than 60% of total arrivals.

Despite a persistent influx of high-sulphur Russian barrels, the HSFO market is still expected to retain strength amid steady feedstock demand, especially from Chinese independent refineries.

“Most of these barrels are discharged into floating storages in the region, blended with vacuum gasoil before getting re-routed to China as refinery feedstocks,” said Emril Jamil, Refinitiv’s senior analyst for crude and fuel oil.

“The heavy Russian arrivals to China satiate rising and (relatively) cheaper alternative feedstock demand to crude,” he said.

Higher seasonal demand for residual fuel burning in the Middle East would also keep the market supported, trade sources said.

Residual fuel oil stocks at Fujairah rose 2% to 10.20 million barrels (1.61 million tonnes) in the week ended April 10, showed Fujairah Oil Industry Zone data published by S&P Global Commodity Insights.