By Nicole Friedman 

NEW YORK--Oil prices fell Monday after government data showed U.S. production is falling more slowly than expected.

U.S. crude production fell to 9.3 million barrels a day in September, down 20,000 barrels from August and the lowest level since June. U.S. crude output has dropped since hitting a multidecade peak in April as producers have cut spending on new drilling, but the pace of declines has slowed in recent months, weighing on prices. In mid-November, the U.S. Energy Information Administration forecast that production would fall to 9.2 million barrels a day in September.

Rapid growth in U.S. production helped push the global oil market into oversupply in 2014, and analysts say a drop in U.S. crude output is needed to raise prices. The resilience of U.S. oil production has surprised many investors and helped keep prices near six-year lows, more than a year into the current price rout.

Producers have become more efficient at extracting oil, and new projects in the Gulf of Mexico have come online. Offshore U.S. production rose in September, offsetting declines in some shale-producing regions.

Analysts expect U.S. oil output to keep falling. The number of rigs drilling for oil in the U.S., which is seen as an indicator of future production, has fallen to the lowest level since 2010, according to oil-field services firm Baker Hughes Inc.

Light, sweet crude for January delivery fell 6 cents, or 0.1%, to $41.65 a barrel on the New York Mercantile Exchange. Prices fell 11% this month, the largest monthly decline since July.

Brent, the global benchmark, fell 25 cents, or 0.6%, to $44.61 a barrel on ICE Futures Europe. The contract fell 10% in November.

This is expected to be a volatile week for oil prices, as traders wait for news from the Organization of the Petroleum Exporting Countries, the Federal Reserve and the European Central Bank, and for other economic data.

OPEC is expected to maintain its strategy of producing at high rates, despite pressure from some member states to cut production to raise prices.

Traders are also waiting on U.S. employment data due Friday, which could be a strong indicator of whether the Fed will raise interest rates in mid-December. An interest-rate increase will likely strengthen the dollar, which could in turn provide a headwind for oil prices by making dollar-priced oil more expensive for foreign buyers.

Citigroup Inc. said in a forecast released Sunday that it expects U.S. oil prices to average $48 a barrel next year, the same as its forecast for this year. For Brent, Citi expects prices to average $53 a barrel in 2015 and $51 a barrel in 2016. This is in contrast to many analysts who expect prices to be higher in 2016 than they have been this year.

By the fourth quarter of 2016, Citi sees U.S. oil prices at $55 a barrel on average and Brent at $60 a barrel.

Diesel futures for December delivery slid 1.55 cents, or 1.1%, to $1.3369 a gallon, the lowest level since April 2009. The December contract, which fell 11% in November, expired at settlement Monday. The January contract fell 2.39 cents, or 1.7%, to $1.3542 a gallon.

December gasoline futures fell 3.18 cents, or 2.3%, to $1.3587 a gallon. Prices fell 3.3% on the month. January gasoline settled down 2.98 cents, or 2.2%, to $1.3069 a gallon.

Retail gasoline prices in the U.S. fell for 24 straight days to average $2.04 a gallon Monday, less than a penny above the multiyear low reached in January, according to AAA.

Write to Nicole Friedman at nicole.friedman@wsj.com

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(END) Dow Jones Newswires

November 30, 2015 15:38 ET (20:38 GMT)