Crude oil rallies in late-day surge, settles almost 2% higher

Get some support after Riyadh says consensus is emerging about extending supply cuts

"While tight fundamentals supported oil prices through mid-May, escalating trade wars and weaker activity indicators have finally caught up with oil market sentiment", Goldman Sachs said in a recent research note.

Oil's gains were triggered by the rally in stocks following the Fed chairman's comments.

U.S. West Texas Intermediate crude futures settled at $52.59 a barrel, up 91 cents, or 1.8%. During the session, WTI touched a low of $50.60 a barrel, its lowest since January 14.

The value of a WTI crude futures contract for July delivery on the New York Mercantile Exchange (NYMEX) rose by $0.23 to $53.48 a barrel. Rising US inventories and relative calm in the Middle East over the last week or so are countering the likelihood that the Organization of Petroleum Exporting Countries and allied producers will extend their output curbs.

US crude output during the first three months of the year was up 1.575 million bpd compared with the same period a year earlier, but the growth rate has slowed from 1.920 million bpd in the third quarter of 2018.

Meanwhile speculators cut their net long positions in U.S. Crude futures and options again in the latest week.

Oil prices resumed their slide on Wednesday, with West Texas Intermediate crude futures (WTI) dropping more than 4 percent after USA crude inventories unexpectedly surged.

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Other energy prices, such as coal and gas, are also being hit hard by the economic downturn.

Prices had been supported by supply curbs by the Organization of the Petroleum Exporting Countries (OPEC) and some allies including Russian Federation.

As OPEC members meet in coming weeks to plan for next six months' production, Iran has warned that the cartel is risking collapse for political reasons, mainly as a result of regional tensions fueled by the longstanding Iran-Saudi disputes. Vitol Group, the world's largest oil trader, expects Opec and its allies to roll over output targets that expire in June after Saudi Energy Minister Khalid Al-Falih said Monday he was committed to doing whatever it takes to stabilize markets.

Much of the concern about production is concentrated in nearby months, while the outlook further forward is dominated by fears about consumption.

-China trade conflict and the new trade dispute that the US opened with Mexico just last week will start to impact global economic growth and lead to slowdown in economic activity and oil demand growth.

Iran's oil output has plummeted to a record low since 1990 in May as a result of US sanctions, Bloomberg reported on Monday June 3. Analysts' had expected stocks to drop by 849,000 barrels, according to a Reuters poll.

Fears of an oil supply glut are fueled by a surprise jump in United States crude inventories.

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