UPDATE 7-Oil at highest since March on lower U.S. inventories, recovering demand

* U.S. crude inventories drop by 5 million barrels
* OPEC says market responding well to record supply cut

(Updates market activity, prices, adds commentary; changes
byline, dateline, previous LONDON)
By Laura Sanicola
NEW YORK, May 21 (Reuters) - Global benchmark Brent rose on
Thursday to its highest since March, supported by lower U.S.
crude inventories, OPEC-led supply cuts and recovering demand as
governments ease restrictions on people's movements imposed due
to the coronavirus crisis.
Crude prices have slumped in 2020, with Brent hitting a
21-year low below $16 a barrel in April as demand collapsed.
With fuel use rising and more signs that the supply glut is
being tackled, Brent has since more than doubled.
Brent LCoc1 rose 15 cents, or 0.4%, to $35.90 per barrel
by 11:25 a.m. EDT (1525 GMT). U.S. West Texas Intermediate crude
CLc1 fell 6 cents, or 0.2%, to $33.43.
"Global supply has been curtailed to a great degree," said
Rystad Energy analyst Paola Rodriguez Masiu. "We are on a clear
path to a gradual recovery now."
In the latest sign the supply glut is easing, U.S. crude
inventories USOILC=ECI fell 5 million barrels last week.
Analysts had expected an increase. EIA/S
"The rally in the crude futures is beginning to approach
levels in which U.S. shale production declines will begin to
slow and possibly reverse as low cost producers attempt to
generate revenue," Jim Ritterbusch, president of Ritterbusch and
Associates in Galena, Illinois, said in a report.
At the same time, there is evidence of recovering fuel use.
Top U.S. airlines and Air Canada (AC.TO) on Tuesday reported
slower ticket cancellations and an improvement in bookings on
some routes, though executives said overall demand remained
weak. The Organization of the Petroleum Exporting Countries,
Russia and other allies, known as OPEC+, agreed to cut supply by
a record 9.7 million barrels per day from May 1.
So far in May, OPEC+ has cut oil exports by about 6 million
bpd, according to companies that track the flows, suggesting a
strong start in complying with the deal. OPEC says the market
has responded well. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
FACTBOX-Oil analysts cut outlook for prices and demand as virus
bites on the coronavirus spread of the coronavirus
around world Knowns and unknowns https://reut.rs/2UHIgvz
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