U.S. crude production in November posted the first annual decline in almost five years as falling prices curbed investment.
The U.S. pumped an average 9.11 million barrels of crude a day in November, down 0.8 percent from a year earlier, the American Petroleum Institute said in a monthly report Thursday.
Tumbling crude prices have lead companies to cut back on exploration and the development of new fields. The number of active oil rigs in the U.S. dropped to 524 in the week ended Dec. 11, the least in five years, according to data compiled by Baker Hughes Inc.
"I think we’re about to see another round of cutbacks, which will result in further decline in output next year," said Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut.
West Texas Intermediate for January delivery dropped 1.6 percent to close at $34.95 a barrel on the New York Mercantile Exchange. It was the lowest close since February 2009. Prices have slipped 34 percent this year.
Production of natural gas liquids, a byproduct of gas drilling, rose 6.4 percent from November 2014 to 3.32 million barrels a day, a record for the month and 28,000 barrels short of the all-time high reached in August.
Total deliveries of fuel, a measure of demand, rose 1.2 percent from a year earlier to the highest November total since 2007. Consumption of gasoline and jet fuel increased while demand for distillate fuel, a category including diesel and heating oil, and residual fuel dropped.
Gasoline consumption rose 3.2 percent from a year earlier and jet fuel demand climbed 6.2 percent, while distillate fuel slumped 1 percent and residual fuel use tumbled 46 percent as prices for natural gas declined.