Traders said the market gained at least $2.00 per tonne during the morning on expectations of a new rally on the back of good demand from Indonesia, India and China.

"The supplies in November are not as long as people had thought previously. The 400,000-500,000 tonnes of arbitrage cargoes that will enter in November all got placed easily," one trader said.

Brokers last quoted November fuel oil at $80.50/$81.50, up from Friday's $78.50/$79.50. They said November traded twice Monday morning at $81.00, sold both times by a US major.

Traders said the US major was also on the sell side of the physical market and sold two cargoes on Friday at $79.75 and $80.00 per tonne to a local trader.

The opposing views and actions of the two players are expected to feature heavily in the market over the next fewdays with the price direction likely set by the winner, they said. Traders said market fundamentals side with a price recovery as supplies appear tight.

They said the rise in refinery runs did not yield as much fuel oil as anticipated due to the processing of sweet or light crudes.

Traders said the market was now gearing up for a new round of arbitrage exports as prices looked set to breach the $80.00 mark.

Gas oil also rose slightly on renewed market confidence as following larger than expected imports from Indonesia and the possibility of arbitrage exports to Latin America.

November gas oil was last quoted at $15.00/$15.10 per barrel, up 25 cents from Friday's $14.75/$14.85.

Traders said sentiment was also boosted by the 611,000 barrel draw in Singapore middle distillate stocks to 11.147 million.