Oil prices extend rally

Oil prices rallied on Tuesday as the market builds on strong recent gains following massive falls earlier in the year.

US benchmark West Texas Intermediate for delivery in June won $2.06 to $60.99 a barrel.

Brent North Sea crude for June advanced $1.69 to stand at $68.15 a barrel in late London deals.

"Crude oil has resumed its strong recovery since bottoming out in mid-March," said Fawad Razaqzada, analyst at Forex.com.

"The trigger behind today?s rally was apparently news that Saudi Arabia, the world's largest exporter of oil, hiked its prices to customers in Europe and North America.

"Evidently, the demand for oil has been stronger than expected from these regions. In addition, the dollar has fallen back after staging a minor recovery in recent days. This has boosted some dollar-denominated commodities," he added.

After slumping at the start of the year, oil prices rose by about a fifth in value during April owing to several factors including concerns about unrest in Yemen, the weakening dollar and fewer US rigs in operation, analysts said.

However, prices remain well down after plunging almost 60 percent between June and the start of 2015 on the back of a global supply glut and ramped up production.

"Crude oil producers in the US have significantly cut back output in an attempt to address the significant supply overhang which has exerted downward pressure on... prices since June last year," Kash Kamal, senior research analyst at Sucden brokers said on Tuesday.

The International Monetary Fund has said that Gulf oil exporters must reduce spending, including subsidies, and diversify their economies to cope with lower revenues caused by the sharp drop in crude prices.

The wealthy monarchies, however, should "not react in a knee-jerk way to lower oil prices", the IMF Middle East and Central Asia chief Masood Ahmed told AFP in an interview Monday.

"Saudi Arabia seem committed to defending their market share and have even increased output to over 10 million barrels per day in April," said Kamal.

"Support for higher crude prices has partly come from a weaker dollar," he added.

A weaker dollar makes oil priced in the US unit cheaper for holders of others currencies, boosting demand.