* OPEC says worried about prices, ready to talk to other
producers
* EIA data shows U.S. crude oil production contracting
(Updates with additional comments throughout)
By Robert Gibbons
NEW YORK, Aug 31 (Reuters) - Oil prices surged more than 5
percent Monday, continuing a three-day rally that has erased
August's price declines, after U.S. oil production data showed
output falling and OPEC said it would talk with other producers
about low prices.
Crude futures rebounded after retreating early Monday,
spiking as new U.S. government figures indicated production was
lower than initially reported for the first half of the year.
U.S. domestic crude oil production peaked at just above 9.6
million barrels per day (bpd) in April before falling by more
than 300,000 bpd over the following two months, Energy
Information Administration (EIA) data showed on Monday.
ID:nL1N1160K9 ID:nL1N1160HY . The report was a surprising
contrast to rig data that has shown an increase of new drilling.
"It caught people off guard with the rig count being up six
weeks in a row," said Tariq Zahir, managing member of Tyche
Capital in Laurel Hollow, New York. "This is eye-opening."
Excess supply has weighed on oil, with the Organization of
the Petroleum Exporting Countries' forecasts pointing to an
oversupply of more than 2 million bpd.
The rally was boosted further as OPEC expressed concern on
Monday about oil's price drop and said the group is ready to
talk to other producers about it. ID:nL9N10A035 Since
November, OPEC countries led by Saudi Arabia have kept
production high to maintain market share, even as prices have
plummeted.
"There's extreme volatility, with London out and the market
is rallying on the OPEC headline," said Scott Shelton,
commodities specialist at ICAP (LONDON:IAP) in Durham, North Carolina,
referring to a bank holiday in Britain.
Brent futures for October LCOc1 rose $2.47 to $52.52, a
4.9 percent gain, by 12:30 p.m. EST (1630 GMT).
U.S. crude CLc1 rose $2.48 to $47.70 per barrel. A close
above $47.12 would prevent U.S. crude posting a loss in August.
The spread between the two benchmarks CL-LCO1=R widened to
$5.05 intraday after narrowing to $4.33