"The market has way to go to the bottom," one trader with a US trading house said. "If you see crude fall more, I won't be surprised if the market is going below $13.00."

Despite falling more than $1.50 per barrel over the last two days, sellers remained prevalent in the Singapore cash market.

On Tuesday, prices settled at $13.10, just 30 cents away from last traded 12-year low values of $12.80 on August 28.

There were 10 sellers offering up to 1.5 million barrels against two bids for 300,000 barrels.

"The market does not look good," one trader said. "There may be some vested interest by some parties to keep prices up but market conditions are so, that supply exceeds demand."

Traders said the absence of key buyers, India and China, contributed to the market's bearish outlook while the rest of Asia was experiencing contracting diesel demand due to slowdown.

State-owned Indian Oil Corp (IOC) disappointed sellers with an award of only one diesel cargo per month in its November and December tenders because of backlog and Port congestion.

In the same period last year, IOC bought 765,000 tonnes of diesel in 17 cargoes combined.

The year-end was usually India's peak diesel demand season as economic activity picks up following the monsoon season.

Traders said China maintained an import ban. Although this was factored into market prices, it still dampened sentiment.

The fall in prices was also spurred along this week by waning support from Singapore trader Hin Leong Trading.

Hin Leong had accumulated more than two million barrels of gas oil in the Singapore cash market over the last two weeks.

But from late last weak the buying prowess of the trader appeared to have weakened, traders said.

They expected some of Hin Leong's purchases to supply Indonesia, which took on four million barrels of gas oil in November and close to that amount in December.

"Indonesia buying is fair but mostly (sales are) in the hands of refiners," one Singapore-based trader said.

"I suspect Hin Leong will offer their cargoes out again later. It's gone nowhere."

Earlier expectations of traditionally stronger fourth quarter demand and restrain in Asian refinery runs had also encouraged some traders to hoard cargoes.

Singapore's middle distillate stock levels hovered near the year's high at above 12 million barrels in the week ended November 11, according to the Trade Development Board.

But an unexpected late start to the Northeast Asian winter, a key demand centre, was now worrying many traders.

"There is a lot of oil. I don't know, tell me where is the positive side," one trader with a western oil company said.

Adding to supply pressures, South Korean refiners were also running near full capacity from November, traders said.