What goes down must come up when it comes to oil prices. Oil prices were up nearly 9 percent Monday, continuing a rally in which the commodity rose more than 27 percent, the biggest three-day gain in 25 years. The surge followed a report that U.S. oil production has dropped and that OPEC, producer of about 40 percent of the world’s oil, would renew its talks with other oil exporters to reach “fair and reasonable prices.”
Crude futures jumped 12 percent last week, erasing August's steep losses, and closing up $3.98, or 8.80 percent, at $49.20 a barrel capping a six-week high. Brent was up $3.70, or 7.4 percent, at $53.80 a barrel.
US Production Hits High
According to Energy Information Administration (EIA) data, U.S. domestic crude oil production hit its high at just above 9.6 million barrels per day (bpd) in April before dropping by more than 300,000 bpd over the following two months.
The EIA report was surprising as previous rig data had shown an increase in new drilling. The lower estimate of U.S. oil production numbers may be due to the new way the EIA calculates how much oil comes out of the ground, now using a survey of producers in key states rather than relying on data from state agencies and computer models. This change in calculation resulted in a decrease of 13.2 million barrels of oil production. 
The announcement of possible higher oil prices sent the market into what may be only a short term rally. No one is trusting OPEC to move ahead as promised and Saudi Arabia, the biggest OPEC producer has not responded.
According to Mike Wittner, head of oil-market research at Societe Generale SA in New York, “Until Saudi Arabia says something this is all meaningless. Why would the Saudis change their logic and waste all they have already done.”