Oil holds near year-long highs

• Houston ship channel traffic slowly coming back to normal

NEW YORK: 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 and return of Texas oil production kept gains in check.

Brent crude traded flat at $65.24 a barrel by 12:24 p.m. EST (1704 GMT), still close to its highest levels since January 2020. US crude fell 15 cents, or 0.2%, to $61.55 a barrel.

Both contracts rose more than $1 earlier before retreating.

Shale oil producers and refiners in the southern United States are slowly resuming production after 2 million barrels per day (bpd) of crude output and nearly 20% of US refining capacity shut down because of last week’s winter storm.

Traffic at the Houston ship channel was slowly returning to normal. Production, however, was not expected to fully restart soon and some shale producers forecast lower oil output in the first quarter.

After the cold snap, US crude oil stockpiles were also seen falling for fifth straight week, while refined products’ inventories also declined last week, an extended Reuters poll showed.

“The freeze off is still supporting prices to a degree but there’s a lid because of how quickly supply will come back,” said John Kilduff, partner at Again Capital LLC.

There were also concerns over the US economic recovery, which the chair of the Federal Reserve, Jerome Powell, said remained “uneven and far from complete.” He said 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 in the second quarter.