U.S. oil production this year was lower than previously estimated, the U.S. Energy Information Administration said Monday. The newly released federal data confirmed that U.S. oil output has taken a hit from lower oil prices, as new investments have proven uneconomic and some companies have struggled to stay afloat. Oil investors and analysts have been surprised this year that U.S. oil output, especially from shale-oil fields, remained robust even as last year's plunge in oil prices led to a drop in spending on new drilling. Companies cut costs and became more efficient in the face of low prices, allowing them to keep production near multi-decade highs. However, the EIA said in a blog post Monday that it has lowered its estimates for production in the first five months of the year by between 40,000 and 130,000 barrels a day each month, due to new survey methodology. The largest revisions came in Texas and the Gulf of Mexico. In addition, the EIA said that June production fell by 100,000 barrels a day to 9.3 million barrels a day, bringing total production in the first half of the year to 9.4 million barrels a day. Oil prices pared some losses on the news. Light, sweet crude fell $1.23, or 2.7%, to $43.99 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell $1.43, or 2.9%, to $48.62 a barrel on ICE Futures Europe. The EIA will release its full production data through June after noon on Monday. The newest report is the first to incorporate EIA data gathered directly from companies, rather than from state agencies. Before the new data, "the magnitude and source of decline has been less than reassuring," said analysts at Morgan Stanley in a note Monday. "However, if the data shows a more pronounced decline in North Dakota, Texas or the interior shale producing states, it could give confidence to a market increasingly doubting any decline in U.S. production." To be sure, U.S. production is still robust. The number of rigs drilling for oil has risen for six straight weeks, sparking some concerns that production growth could resume sooner than expected. Goldman Sachs Group Inc. analysts said in a note Friday that based on current rig data, they expect U.S. production in the fourth quarter to be 130,000 barrels a day higher than a year before, up by 5,000 barrels a day from their estimate the previous week. Oil prices fell to six-year lows last week but then soared Thursday and Friday, in a move most analysts attributed to traders closing out bets on lower prices. Gasoline futures fell 2.3% to $1.4870 a gallon. Diesel futures fell 2% to $1.5442 a gallon.
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