Oil prices increased to their highest since January 2020, with Brent price rising past $60 a barrel, due to supply cuts among major producers and expectations for further economic stimulus measures in the US.

Brent grew $0.71, or 1.2%, to reach $60.05 a barrel, while US West Texas Intermediate increased $0.64, or 1.1%, to $57.49 a barrel, reported Reuters.

Swiss bank Julius Baer analyst Norbert Rücker said: “Oil prices are back close to pre-pandemic levels. Support seems robust and the narrative sees the oil market swiftly burning through the remaining crisis-surplus, potentially running into tightness later this year.”

The market has tightened due to deeper output cuts from Saudi Arabia, which pledged voluntary additional reductions in February and March on the back of output cuts by other members of the OPEC and its allies.

OCBC economist Howie Lee said Saudi Arabia had indicated a ‘very bullish signal’ last week when it did not change the monthly crude prices to Asia even when there were expectations of small output cuts.

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

Meanwhile, oil investors are monitoring the $1.9tn Covid-19 aid package for the US. It is expected to be passed by lawmakers as early as this month.

Due to strong crude prices, US producers are increasing output.

The US oil rig count grew last week to its highest since May, according to Baker Hughes.