Oil prices rose on Monday to their highest in just over a year, with Brent nudging past $60 a barrel, boosted by supply cuts among key producers and hopes for further US economic stimulus measures that can boost demand.

Brent was up $0.69, or 1.2%, at $60.03 a barrel by 1218 GMT, and US West Texas Intermediate rose $0.64, or 1.1%, to $57.49 a barrel. Both contracts were at their highest levels since January 2020.

 “Oil prices are back close to pre-pandemic levels,” said Norbert Rucker, analyst at Swiss bank Julius Baer.

 “Support seems robust and the narrative sees the oil market swiftly burning through the remaining crisis surplus, potentially running into tightness later this year,” he added.

The oil market continues to tighten with deeper cuts from Saudi Arabia who pledged extra supply cuts in February and March on the back of reductions by other members of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies.

In a sign that prompt supplies are tightening, the six-month Brent spread hit a high of $2.54 on Monday, its widest since January last year.

OCBC’s economist Howie Lee said the world’s top exporter Saudi Arabia sent a “very bullish signal” last week when it kept monthly crude prices to Asia unchanged despite expectations of small cuts.

 “I don’t think anybody dares to short the market when Saudi Arabia is like this,” he added.

A weaker dollar against most currencies on Monday also supported commodities, with dollar-denominated commodities becoming more affordable to holders of other currencies.

Investors are also keeping a close watch on a $1.9 trillion Covid-19 aid package for the United States that is expected to be passed by lawmakers as soon as this month.

Hopes that Iranian oil exports would soon return to the market have been dampened, supporting oil prices.

US President Joe Biden said the United States would not lift sanctions on Iran simply to get it back to the negotiating table, while Iran’s Supreme Leader Ayatollah Ali Khamenei said all sanctions should be lifted first.

Stronger crude prices are, meanwhile, encouraging US producers to increase output.

The US oil rig count, an early indicator of future output, rose last week to its highest since May, according to energy services firm Baker Hughes Co.

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