Crude oil futures soared by 2.5 per cent in the domestic market on Monday as investors and speculators booked fresh positions in the energy commodity tracking a firm trend in the overseas market amid speculation of a further drop in US oil output after a report showed a third straight weekly decline in the country's oil rig count, stemming worries over a global supply glut.
Baker Hughes reported that the number of rigs drilling for oil fell by 8 to 644 last week.
Meanwhile, oil & natural gas projects around USD 1.5 trillion are at risk because of a collapse in oil prices which have halved since last summer, a report by Wood Mackenzie said.
US Federal Reserve officials' reassurance over the health of the world's biggest economy bolstered the demand outlook for the fuel. Fed officials signaled that strength in the domestic economy may overshadow worries over slowing global growth.
Traders cast aside a slump in US existing home sales last month, which signaled a slowing US housing recovery. Purchases of previously owned homes plunged 4.8 per cent to a 5.31 million annual pace in August.
Oil may extend gains today as faster gains in a China leading index eases worries over a slowdown in the world's second biggest economy, lifting the demand outlook for the fuel.
At the MCX, Crude oil futures, for the September 2015 contract, closed at Rs 3,043 per barrel, up by 2.5 per cent, after opening at Rs 2,971, against the previous close price of Rs 2,969. It touched an intraday high of Rs 3,053