Oil prices rose Monday to their highest level in more than a year, with Brent crude topping $60 a barrel, boosted by supply cuts at major producers.
Brent crude rose 2.06% to $60.56 a barrel, while U.S. West Texas Intermediate rose 1.97% to $57.97 a barrel. Both benchmarks were the highest since January 2020.
"Managing to break through the $60 mark again gives the impression that the market is finally resurfacing after a long struggle and a good breath," said Paola Rodriguez Masiu, Rystad Energy's vice president for oil markets. "It offers a sense of normalcy again."
Brent and WTI have risen more than 60% since early November. Optimism surrounding the distribution of coronavirus vaccines as well as production cuts by OPEC+ members have pushed prices higher.
"There seems to be a paradigm shift in the market," said Phil Flynn, senior analyst at Price Futures Group in Chicago. "There is a sense that the oil glut is disappearing faster than anyone thought possible."
Saudi Arabia has promised additional supply cuts in February and March, following reductions by other members of the Organization of the Petroleum Exporting Countries and its allies.
In a sign that fast supplies are tightening, Brent's six-month spread hit a high of $2.54 on Monday, its widest level since last January, a sign of demand for current supply.
OCBC economist Howie Lee said the world's largest exporter, Saudi Arabia, sent a "very bullish signal" last week by keeping monthly crude prices to Asia unchanged despite expectations of small cuts.
"I don't think anyone dares to short the market when Saudi Arabia is like that," he added.
Investors are watching a $1.9 trillion COVID-19 aid package for the U.S. that is expected to be passed as early as this month.
Hopes that Iranian oil exports will soon return to the market have been dampened, which has supported oil prices.