Oil prices climbed over 3% on Tuesday on hopes for growing fuel demand after China’s central bank lowered a short-term lending rate for the first time in 10 months, boosting crude prices after steep losses the previous session.

The rate cut is aimed at adding momentum to a hesitant post-pandemic recovery in the world’s second-largest economy and biggest crude importer.

Brent crude futures settled up $2.45, or 3.4%, to $74.29 a barrel. U.S. West Texas Intermediate (WTI) crude gained $2.30, or 3.4%, at $69.42 a barrel.

On Monday, crude prices fell by about 4%, in part because of concerns about the Chinese economy after disappointing economic data last week.

“The market is showing a rebound from yesterday,” Phil Flynn, an analyst at Price Futures group, said. “It was overdone with doom and gloom on Monday.”

Equities, which often trade in tandem with oil, also rose on Tuesday.

Brent’s six-month backwardation, a market structure whereby shorter-dated futures trade above longer-dated ones, fell to its lowest since March at around $1.10, indicating faltering confidence that demand will exceed supply over the year.

“For market participants to start building up long positions again, they likely need to see larger inventory declines,” said UBS strategist Giovanni Staunovo, adding he expected this to happen within weeks.

A rise in global supplies is weighing on the market, along with concerns about demand growth, ahead of a U.S. Federal Reserve policy meeting concluding on Wednesday.

Most market participants expect the Fed to leave interest rates unchanged, especially after data showed U.S. consumer prices barely rose in May.

The Fed’s rate hikes have strengthened the dollar, making oil more expensive for holders of other currencies.

The European Central Bank is expected to hike interest rates on Thursday.

Worries about demand have unravelled the temporary boost in oil prices from Saudi Arabia’s pledge announced early this month to cut more production in July.

The Organization of Petroleum Exporting Countries (OPEC) kept its forecast for 2023 global oil demand growth steady for a fourth month on Tuesday, slightly increasing expectations of Chinese demand growth.

Another monthly report by the International Energy Agency (IEA) due on Wednesday will provide further trading cues.

U.S. crude oil rose by about 1 million barrels in the week ended June 9, according to market sources citing American Petroleum Institute figures on Tuesday, contrary to the average estimate for a 1.3 million barrel decline according to five analysts polled by Reuters.

Government data on stockpiles is due on Wednesday.