Oil holds near year-long highs as COVID lockdowns seen easing

LONDON: Oil prices were steady on Tuesday, trading close to more than year-long highs on signs that global coronavirus restrictions were being eased although concerns about the pace of a US economic recovery kept gains in check.

Brent crude was up 7 cents, or 0.1%, at $65.31 a barrel by 1505 GMT, still close to its highest levels since January 2020. US crude fell 14 cents, or 0.2%, to $61.56 a barrel.

Both contracts rose more than $1 earlier before retreating.

"Vaccine news is helping oil, as the likely removal of mobility restrictions over the coming months on the back of vaccine rollouts should further boost the oil demand and price recovery," UBS oil analyst Giovanni Staunovo said.

But, tempering the upbeat mood, the chair of the US Federal Reserve, Jerome Powell, said the US economic recovery remained "uneven and far from complete" and it would be "some time" before the central bank considered changing policies it had adopted to help the country back to full employment.

Commerzbank analyst Eugen Weinberg said the recent oil price rise was buoyed by upbeat price forecasts from US brokers.

Goldman Sachs expects Brent prices to reach $70 per barrel in the second quarter from the $60 it predicted previously, and $75 in the third quarter from $65 forecast earlier.

Morgan Stanley, which expects Brent to reach $70 in the third quarter, said new COVID-19 cases were falling while "mobility statistics are bottoming out and are starting to improve".

Bank of America said Brent prices could temporarily spike to $70 per barrel in the second quarter.

In the United States, traffic at the Houston ship channel was slowly returning to normal after last week's winter storm, although production was not expected to fully restart soon.

Some US shale producers forecast lower oil output in the first quarter.

Stockpiles of US crude oil and refined products likely declined last week, a preliminary Reuters poll showed on Monday, due to the disruption in Texas.