UPDATE 10-Oil prices surge as coronavirus lockdowns ease

* Reopenings in several countries, U.S. states fuel optimism
* UBS sees end-2020 Brent at $43/bbl, $55/bbl by mid-2021
* Air traffic may not recover for years, airline bosses warn
* U.S. crude stocks rise 8 mln bbls last week, gasoline
falls -API

(Adds API data)
By Stephanie Kelly
NEW YORK, May 5 (Reuters) - Oil prices soared on Tuesday, as
some European and Asian countries along with several U.S. states
began to ease coronavirus lockdown measures.
The rally extended Brent crude's gains to six straight days,
while U.S. benchmark West Texas Intermediate has now rallied for
five consecutive sessions. Fuel demand worldwide was down
roughly 30% in April, but demand is rising modestly due to
efforts to lift travel restrictions.
International benchmark Brent crude LCOc1 rose $3.77, or
13.9%, to settle at $30.97 a barrel. U.S. West Texas
Intermediate (WTI) crude CLc1 futures gained $4.17, or 20.5%,
to close at $24.56 a barrel.
Prices extended their gains in after-hours trading despite
industry data showing a larger-than-forecast weekly build in
U.S. crude inventories, as the report also showed a surprise
large fall in gasoline stocks.
U.S. crude inventories rose 8.4 million barrels last week,
data from industry group the American Petroleum Institute showed
late Tuesday. Analysts forecast a build of 7.8 million barrels
ahead of the government's report on Wednesday
morning EIA/S
The API also reported gasoline stocks fell 2.2 million
barrels, compared with analysts' expectations in a Reuters poll
for a 43,000-barrel increase, signaling that demand was
recovering.
Italy, Spain, Nigeria and India, as well as some U.S. states
including Ohio, began allowing some people to go back to work
and opened up construction sites, parks and libraries. Health
experts, however, have warned that such moves could cause
coronavirus infections to rise again. "The market is starting to realize that demand destruction
has been terrible, but we're reopening and demand is going to
get better," said Phil Flynn, senior analyst at Price Futures
Group. "But the production pullback is just beginning."
U.S. President Donald Trump hailed measures by the states to
reopen their economies. Vehicle traffic in most of the United States, including
those parts that have yet to lift shelter-in-place orders, has
also rebounded, RBC Capital Markets research said in a note.
Swiss bank UBS said the easing of restrictions would help
balance out supply and demand, leading to a shortfall in supply
by the fourth quarter.
Morgan Stanley said the peak of oversupply in global markets
had likely been reached and a storage crunch was abating.
"Inventories have built but not quite as strongly as feared:
With social distancing measures ramped up in March ... the
observed inventory increases have not been quite as strong as
feared," it said in a note.
Saudi Arabia's crude oil exports in May are expected to drop
to about 6 million barrels per day (bpd), the lowest in almost a
decade, industry sources and analysts say.
The top exporter is cutting production from May under a
supply pact with the Organization of the Petroleum Exporting
Countries and allies like Russia.
However, Vitol Chief Executive Russell Hardy told Reuters
long-term peak demand may be permanently eroded. Global oil
demand sank by 26 million to 27 million barrels per day (bpd) in
April, and Hardy predicts a year-on-year drop of more than 8
million bpd. In addition, air traffic is not expected to rebound soon,
which will slow the recovery for fuel demand.