Updated from 12:01 p.m. EDT

Crude oil prices erased an early loss to close higher Monday and are now less than $1 below their all-time high of $42.33 a barrel touched in early June.

The benchmark U.S. crude gained 14 cents to $41.44, while gasoline prices fell 1 cent to $1.291 a gallon.

Traders remain focused on the outlook for short-term supplies.

The Organization of Petroleum Exporting Countries last week said it had decided to increase its production ceiling by half a million barrels a day in August and also cancelled a July 21 meeting on the issue.

The measure was part of a broader agreement reached at OPEC's June 3 meeting, when it decided to increase official production by two million barrels a day in July. Prices touched a record high of more than $42 a barrel right before that meeting.

The August increase will put OPEC's official production ceiling at 26 million barrels a day, although its members routinely produce more than their individual quotas. A recent International Energy Agency report said the cartel produced more than 28 million barrels a day in July, when its ceiling was just 23.5 million barrels a day.

At one point recently, oil prices had fallen 15% from their record high, closing below $36 a barrel.

Since then prices have bounced back on worries about production levels in such major oil-producing countries as Iraq, Norway, Nigeria and Russia, as well as terror attacks on the U.S. ahead of the presidential election.

During May, traders relentlessly bid up prices on short-term supply concerns triggered by strong global demand and terror attacks on oil-industry personnel and facilities in the Persian Gulf region ahead of the peak summer driving season in the U.S. and Europe.

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