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Oil prices settled higher for the second consecutive session on Tuesday, as traders downplayed hopes of a Middle East ceasefire and focused on signs of improving demand from China, which could tighten market balances in the months ahead.

Brent crude futures for December gained $1.75, or 2.4 per cent, to settle at $76.04 per barrel. U.S. West Texas Intermediate crude futures for November delivery rose by $1.53, or 2.2 per cent, to $72.09 a barrel and expired after Tuesday’s settlement.

Beijing’s recent efforts to reinvigorate its slowing economy have led some analysts to raise expectations for oil demand in the world’s largest crude-importing nation. Weak demand from China amid rapid electrification of its car fleets weighed heavily on oil prices in recent months.

Both Brent and WTI rose nearly 2 per cent on Monday, recouping some of last week’s more than 7 per cent decline, after China announced cuts to benchmark lending rates.

Any improvement in economic growth should also boost fuel consumption. Still, it may take some time for the stimulus efforts to filter through to oil demand, said StoneX analyst Alex Hodes.

“We have perhaps seen the low point in demand, but I do not know if there is much consensus regarding how much it can improve the situation,” Hodes said.

In a note to clients on Monday, analysts at Goldman Sachs said their China demand tracker rose by about 100,000 barrels per day in the prior week to a six-month high, partly as the country’s industrial production and retail sales beat expectations. China on Tuesday set crude import quotas for next year at 257 million metric tons (5.14 million b/d), up from this year’s 243 million tons.

Global oil inventories point to a supply deficit in the fourth quarter, which should support prices in the near-term, Hodes said.

Global petroleum stocks were around 1.24 billion barrels last week, 5 million barrels lower than last year, according to StoneX’s review of data from major trading hubs. U.S. crude stockpiles likely rose around 300,000 barrels last week, while distillate and gasoline stocks fell more than a million barrels each, a preliminary Reuters poll showed. Crude stocks dropped by 2.2 million barrels in the week ended Oct. 11. In the Middle East, U.S. Secretary of State Antony Blinken met Israeli Prime Minister Benjamin Netanyahu in the first big push for a Middle East ceasefire since Israel killed the leader of Hamas last week. Washington hopes this will provide an opportunity for peace.

Blinken has made little progress towards a ceasefire in his previous 11 visits to the region since the war in Gaza erupted, so there is skepticism among investors that this will be any different, said Bob Yawger, director of energy futures at Mizuho. Israel has so far shown no sign of relenting in its Gaza and Lebanon campaigns, while Iran-allied Hezbollah ruled out negotiations while fighting with Israel continues.

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