* 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