UPDATE 7-Oil posts monthly gains as U.S. reports record output cuts in May

* U.S. cuts production most on record - EIA
* Weaker dollar boosts commodity prices
* Weak refining margins and lower Chinese oil demand weigh

(Updates with settlement prices)
By Jessica Resnick-Ault
NEW YORK, July 31 (Reuters) - Oil prices rose on Friday and
were on track for monthly gains, benefiting from news that U.S.
oil output cuts in May were the largest on record.
Brent crude LCOc1 settled up 37 cents, or 0.9%, at $43.31
a barrel.
U.S. crude CLc1 was up 35 cents, or 0.9%, at $40.27 after
dropping 3.3% in the previous session, also off lows not seen
since July 10.
Brent crude posted a fourth month of gains and U.S. crude
posted a third as both rise from depths hit in April, when much
of the world was in lockdown due to the coronavirus pandemic.
U.S. crude oil production plummeted in May, falling a record
2 million barrels per day to 10 million bpd, the U.S. Energy
Information Administration said in a monthly report on Friday.
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"After a bad day for big oil with terrible earnings, we're
starting to see the impact in barrels," said Phil Flynn, an
analyst at Price Futures in Chicago. "This suggests that we will
see a tighter market in the future, and if the economy turns
around we will have trouble meeting demand."
The dollar extended its dramatic fall on Friday and was on
course for its biggest monthly drop in a decade after news on
Thursday that U.S. gross domestic product collapsed at a 32.9%
annualized rate - the steepest decline in output since records
began in 1947. Investors typically use dollar-denominated commodities as
safe havens when the currency weakens.
"Global stimulus and a weak dollar will continue to support
oil prices, as historically oil is seen as a hedge against
inflation," said Keshav Lohiya, chief executive officer of
consultancy Oilytics.
Globally, the economic outlook has dimmed again, with
increasing coronavirus infections raising the risk of renewed
lockdowns and threatening any rebound, according to Reuters
polls of more than 500 economists. Weaker refining margins around the world, lower Chinese oil
demand and high crude inventories are putting further pressure
on oil prices, Lohiya said.
Bjornar Tonhaugen, head of oil markets at Oslo-based Rystad
Energy, said traders will next week closely monitor oil output
increases by the Organization of the Petroleum Exporting
Countries (OPEC) and its allies.
The group, known as OPEC+, collectively plans to increase
production from Saturday, adding about 1.5 million barrels per
day to global supply, after slashing output in the wake of the
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Oil vs. USD and gold https://tmsnrt.rs/2M55YzY
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