They said fuel oil was likely to lead the market up this time as expectations of a supply overhang in November due to arbitrage exports were replaced by the possibility of a shortfall.

Large purchases by India, China and Indonesia had made it easy to place out the 400,000-500,000 tonnes shipped to the region when the arbitrage window opened in mid-October, traders said.

They said the market had overestimated the impact of higher crude runs by regional refiners in October and supplies were not as long as earlier perceived.

"The market seems to be tight despite the arbitrage barrels. People thought there would be more supplies because of the run hikes, but that's not the case," one trader said.

They said part of the reason for lower fuel oil throughput despite higher refinery production rates was the use ofeither sweet or light crudes where the high sulphur fuel oil yield is small.

Traders said added to firm fundamentals was the determination of a Singapore trader to buy up the market, which most believed would take prices above $80.00 per tonne within the next few days.

The higher prices have also opened an arbitrage window and traders said they expected a new round of exports for to arrive in December and moderate the market's rise.

Gas oil was also expected to gain some ground this week on the back of renewed optimism following unexpectedly large purchases from Indonesia for November arrival which could total four million barrels compared to the 1.8 million secured for October.

Traders said the opening of an arbitrage window to Latin America and the emergence of physical support also helped shore up sentiment.

While naphtha would remain tight for the next few months, gasoline supplies were plentiful, they said.

The steep backwardation seen in the naphtha market was expected to ease further thisweek as word of arbitrage cargoes sends bearish chills through the market.

Traders said tighter supplies had not put enough upward pressure on the naphtha price to support it independently of crude.

Gasoline prices were not expected to move independently of crude and naphtha this week as supplies were abundant, demand weak and reforming margins stuck at extremely low levels.

The spread of 95-octane over naphtha was expected to remain at unprofitable levels of around $1 per barrel, refiners said.

A $3.00 spread would be a benchmark breakeven point for the industry, they said.