US crude oil soars 8.8% on lower US output, OPEC signal

US crude oil closed nearly nine percent higher Monday as the government lowered its domestic production estimate and OPEC highlighted concern about multi-year low prices.

US benchmark West Texas Intermediate for October delivery jumped $3.98 (8.8 percent) to $49.20 a barrel on the New York Mercantile Exchange. It had rebounded more than 11 percent over the five previous sessions, its biggest increase in four and a half years.

WTI, which had opened in negative territory, pushed higher after the Department of Energy said that US domestic production in June was 9.3 million barrels a day, about 100,000 barrels lower than its previous estimate.

Monthly estimates for the January to May period were all revised lower by as much as 130,000 barrels a day.

The department's Energy Information Administration said the changes were made after it expanded the data included in its regular survey of output.

US production had been running at record levels since the beginning of the year, exacerbating the global oversupply situation.

Another key factor in the price surge was a statement by the OPEC oil cartel to the effect that the continuing downward pressure on prices "remains a cause for concern" for the group.

It tied the price pressure to higher production and market speculation.

"There are growing fears that, under the current low-price scenario, investment in future capacity additions will continue to be shelved or cancelled altogether," the group said.

Led by Saudi Arabia, OPEC countries so far have refused to cut back output in the face of lower prices, with Riyadh focused on holding on to market share and pushing out from the market high-priced producers, a strategy that so far has not appeared to work.