Brent crude rose $1.75 or 2.4 percent to settle at $76.04 per barrel as traders ignored the possibility of a ceasefire in the tension-filled Middle East and jumped on signs that demand will improve in China, the world’s second largest economy.
Also, the US West Texas Intermediate (WTI) gained $1.53, or 2.2 percent to $72.09 a barrel.
This development means oil prices settled higher for the second consecutive session on Tuesday as traders banked on recent efforts by China to support its slowing economy.
This has led 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.
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.
Also, China set crude import quotas for next year at 257 million metric tons (equivalent to 5.14 million barrels per day), up from this year’s 243 million tons on Tuesday.
On the geopolitical front, the US Secretary of State, Mr Anthony Blinken met Israel’s Prime Minister, Mr Benjamin Netanyahu and pushed for a ceasefire in the Middle East after the country killed the leader of Hamas last week.
The US, which is an ally of Israel, hopes that this will provide an opportunity for peace in the region.
The US envoy’s visit marked the 12th visit but he has not been able to achieve the desired outcome so investors took this as a sign that nothing will change in the near term.
Also, Israel does not look like it will stop in Gaza and Lebanon just as Iran-back Hezbollah appears not to be relenting.
The market also overlooked the rise in crude oil inventories in the US which rose by 1.643 million barrels for the week ending October 18, according to the American Petroleum Institute (API). For the week before, the API reported a 1.58-million-barrel draw in crude inventories.
Official data from the US Energy Information Administration (EIA) is due later on Wednesday.