UPDATE 8-Oil surges 5% on U.S.-China trade optimism, falling crude output

* U.S./Canadian oil & gas rig count falls to record low
* WTI posts record monthly gain of 88%
* Brent up 40% in biggest monthly rise since March 1999

(Adds settlement prices, market activity, comments)
By Laila Kearney
NEW YORK, May 29 (Reuters) - Oil prices soared on Friday,
with U.S. futures closing out May with record monthly gains, on
hopes that the U.S.-China trade deal would remain intact and on
falling crude production.
West Texas Intermediate crude futures CLc1 for July
delivery settled at $35.49 a barrel, jumping $1.78, or 5.3%.
July Brent crude LCOc1 closed at $35.33 a barrel, gaining
4 cents. However, the more active August LCOc2 contract ended
at $37.84, rising $1.81, or roughly 5%.
Both benchmarks saw steep monthly rises due to falling
global production and expectations for demand growth as parts of
the United States, including New York City, and other countries
move to reopen after coronavirus-related lockdowns. WTI recorded an all-time monthly rise of 88% after trading
negative last month. Brent logged an increase of about 40% for
its strongest monthly bounce since March 1999.
U.S. President Donald Trump said his administration will
begin to eliminate special treatment for Hong Kong in response
to China plans to impose new security legislation in the
territory, but he did not say the first phase of the
Washington-Beijing trade deal was in jeopardy.
That put oil investors, worried that a breakdown in trade
relations would further hurt oil consumption, at ease.
"There was a lot of nervousness going into this press
conference, so it looks like the worst case scenario doesn't
appear to be emerging," said John Kilduff, a partner at Again
Capital Management in New York.
Oil was also supported by a record-low number of U.S. and
Canadian oil and gas rigs, which indicates a further drop in
supply out of the world's biggest crude producer. RIG/U
The U.S. oil and gas rig count fell by 17 to an all-time low
of 301 this week, according to data from energy services firm
Baker Hughes Co BKR.N going back to 1940.