US lowers estimate of domestic crude oil output

The US government cut its estimate of domestic oil production on Monday, helping send crude prices sharply higher.

The Department of Energy said that domestic production in June was 9.3 million barrels a day, about 100,000 barrels lower than the 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 output had been running at record levels since the beginning of the year, exacerbating the global oversupply situation.

After opening lower, prices for the domestic crude benchmark, West Texas Intermediate for October delivery, surged more than $2 a barrel to $47.88 in early afternoon trade.

The key London contract, Brent crude, was also up by a similar amount to $54.17.

Another key factor in the price surge was a statement by the OPEC oil cartel 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.