"Prices were up so strongly yesterday because of crude," a trader said. "But today, the markets are adjusting and correcting themselves to a more reasonable level."

Most traders concurred that regional fundamentals, particularly for gas oil, did not warrant a big leap.

"The bears are still at large and as far as demand goes, it's not that fantastic," one trader said.

The absence of key importer China, following its renewed clampdown on oil imports this week which revokes remaining diesel licences hampered sentiment.

October swaps were talked at $16.55/$16.75 per barrel, compared with Monday's $16.95/$17.10.

November was notionally discussed at $16.95/$17.15, brokers said.

In the physical market, cargoes of 150,000-barrel each were traded at least twice at $16.60 on Monday, compared with the previous trades at $16.15 and $16.20 done onFriday.

Fuel swaps also were talked lower on Tuesday, taking a corrective step after Monday's sharp upturn in prices, traders said.

October was indicated at $83.50/$84.25 per tonne, down from $84.50/$85.50 seen on Monday.

November remained in backwardation at $79.75/$80.50, brokers said.

Some traders held the view that while fundamentals were less bearish compared with gas oil, the price hike overnight was largely overdone and should find themselves readjusted to a more "realistic level".

The physical market on Monday saw a bid at $85.00 for October 6-10 lift, but elicited no offers. The bid was at least $5.00 higher from Friday's highest bid.

Naphtha paper, in contrast, held steady with crude as October and November were quoted almost unchanged from Monday at $14.80/$14.90, traders said.