LONDON- Oil prices rose towards $69 a barrel on Tuesday as investors focused on prospects for tighter supply due to extended OPEC+ output curbs and amid growing hopes of a recovery in demand.

Crude it its highest level since the start of the pandemic on Monday after Yemen's Houthi forces fired drones and missiles at Saudi oil sites on Sunday. Saudi Arabia said it thwarted the strike and prices slipped as supply fears eased. 

Brent crude was up 51 cents, or 0.8%, at $68.75 by 1200 GMT, after trading as low as $67.61. It reached $71.38 on Monday, the highest since Jan. 8, 2020.

U.S. West Texas Intermediate (WTI) added 37 cents to $65.42, after hitting its highest since October 2018 on Monday.

"Dips have been lately viewed as buying opportunities," said Tamas Varga of broker PVM. "Last week's OPEC+ meeting will ensure that the global oil balance will get tighter in the foreseeable future."

On Monday, Brent rose to $71.38, its highest since Jan. 8, 2020 and U.S. crude hit $67.98, the highest since October 2018.

"With a structural undersupply in the physical market now, any dips in oil prices are likely to attract physical buyers' attention," said Jeffrey Halley of broker OANDA.

Prices also rose on expectations of economic recovery after the U.S. Senate approved a $1.9 trillion stimulus package, outweighing a stronger U.S. dollar, which tends to crimp investor demand for commodities.

U.S. Treasury Secretary Janet Yellen said on Monday the aid package would provide enough resources to fuel a "very strong" U.S. economic recovery. The U.S. House of Representatives must still approve it. 

On Thursday, the Organization of the Petroleum Exporting Countries (OPEC), Russia and allies, known as OPEC+, decided to broadly stick to output cuts, sparking a further rally.

In another development that would support prices, U.S. crude stockpiles are expected to drop. The first of this week's reports, from the American Petroleum Institute, is out at 2130 GMT. 

(Additional reporting by Jessica Jaganathan; Editing by Edmund Blair) ((alex.lawler@thomsonreuters.com; +44 207 542 4087; Reuters Messaging: alex.lawler.reuters.com@reuters.net))