In South China's Fujian province, wholesale gas oil prices fell to 2,100 yuan per tonne in early April from 2,250 yuan in early March, a Sinopec trader said.

Traders said fishing boats in east China's Zhejiang and Fujian were sourcing gas oil as low as 2,000 yuan per tonne.

Some were smuggled products, others were blending stuff of cheaper atmospheric gas oil (AGO) and heavy diesel bought from northern refineries.

"Fishermen and peasants only care about price and colour (of gas oil). They have little knowledge of what is in the engine," said a trader.

The second quarter was China's planting and fishing season, with the latter ending mid-July. The two were the majority gas oil consumers.

Barge sales to China from Hong Kong terminal operators increased dramatically in March to around 260,000 tonnes, traders in Hong Kong said.

At aFebruary government conference, Chinese authorities called for a crack down on barge smuggling nicknamed "ants", as opposed to bulk smugglers or "crocodiles".

But few cases were reported by local customs as smuggling was widespread and difficult to detect.

Gasoline prices, however, were seen firming in April due to tighter supply from the North and possible stock builds ahead of the fuel tax likely to be effective in the third quarter.

"We have been able to cut gasoline production by almost 300,000 tonnes in April, while boosting gas oil production," said a marketing manager with China National Petroleum Corp (CNPC), China's oil major in the North.

He said the strength in gasoline prices were not driven by demand as there was no driving season in China.

"People are again gambling on a rumour saying fuel tax on gasoline is likely to be in place in June," he said.

China's much-debated fuel tax was seen resulting in a gasoline price hike of as much as 70 per cent.

Wholesale gasoline prices inFujian province gained 100 yuan per tonne from March, local traders said.

Both Sinopec and CNPC have plans to artificially prop up the wholesale gasoline price by July through combined efforts in their marketing sectors to reap higher returns, sources said.

They said the supply overhang was also offset by increased gasoline exports.

Elsewhere, the Indonesian state oil company Pertamina was still negotiating the price of gasoline sought in its May oil products tender, traders said in Singapore today.

They said Pertamina sought around three 200,000-barrel cargoes of 92-octane for May delivery at a price of around 40 cents per barrel over Singapore fob 92-octane prices.

"I think it's the high outright price that's causing the delay in purchasing", one Singapore trader said.

So far this year, only Dutch trader Vitol has managed to fill Indonesia's spot gasoline requirements and has sold a total of 1.68 million barrels for January and February delivery at 10 and 40-cent per barrel premiums respectivelyover 92-octane fob Singapore spot quotes.

Most Singapore traders said they thought the main offers on the gasoline portion of the May delivery tender were coming from Vitol.

Sources at Vitol were not immediately available for comment.