UPDATE 10-Oil up 3% as countries ease lockdowns, production falls

* U.S.-China trade worries offset supply cuts
* Goldman Sachs says it remains bullish on oil prices in
2021
* Brent contango narrows as supply cuts take effect

(Updates prices, market activity, comments to settlement)
By Laila Kearney
NEW YORK, May 4 (Reuters) - Oil was up 3% on Monday as more
countries announced they would begin easing coronavirus
lockdowns and as crude supply cuts by the world's top producing
nations and companies take hold.
Worldwide fuel demand fell by an estimated 30% in April
largely due to stay-at-home orders, and weak consumption is
expected to overhang the crude market for months, even as major
world oil-producers reduce output as of May 1. However, analysts
have said that swift action by those parties could help reduce
the supply glut more quickly.
"The market continues to price in the idea that things are
improving," Gene McGillian, vice president of market research at
Tradition Energy in Stamford, Connecticut.
Brent crude LCOc1 settled at $27.20 a barrel, up 76 cents,
or 2.9%, while U.S. West Texas Intermediate (WTI) crude CLc1
gained 61 cents, or 3.1%, to $20.39 a barrel.
"We're supposed to see the production cuts start to show
up... the slow restart of not only some of the states here in
the U.S. but some of the countries in Europe is beginning to
partially alleviate some of the demand fears," McGillian said.
Italy, Finland and several U.S. states were among numerous
governments moving to ease lockdown restrictions on Monday to
resurrect their economies, but officials cautioned against
acting too swiftly as coronavirus cases passed 3.5 million and
deaths neared a quarter of a million globally.
In addition to fresh supply cuts that began this month by
the Organization of the Petroleum Exporting Countries and its
allies, a group known as OPEC+, oil and gas output from some of
the world's top oil companies is set to drop in the second
quarter of 2020 to levels not seen in at least 17 years.

Goldman Sachs said it is growing more optimistic about the
rise of oil prices next year due to lower crude production and a
partial recovery in oil demand.
The Wall Street bank raised its 2021 forecast for global
benchmark Brent to $55.63 per barrel from $52.50 earlier. The
bank hiked its estimate for WTI to $51.38 a barrel from $48.50
previously.
The re-emergence of trade tensions between the United States
and China limited the rise in prices.
"Demand growth in China is good for the energy market right
now, it is pretty much the only game in town" said Bob Yawger,
director of energy futures at Mizuho. "Even a verbal scrap with
President Trump is not good for China demand growth, considering
the fragile circumstances the market is currently operating
under."
Adding to U.S. President Donald Trump's threat last week to
impose tariffs on China, Secretary of State Mike Pompeo said on
Sunday there was "a significant amount of evidence" that the new
coronavirus emerged from a Chinese laboratory. Oil prices recovered some of their losses after U.S.
Treasury Secretary Steven Mnuchin said he expected China to make
good on its trade agreement with the United States. He also said
he expected oil markets to rebound, and that the Trump
administration was looking for more storage capacity.