The U.S. Energy Information Administration (EIA) forecast that U.S. crude production for 2016 and 2017 will fall by less than previously expected, according to a report issued on Sept. 7, adding to growing fears that drillers are returning to the wellhead and increasing production.

The agency said 2016 crude production will fall by 650,000 barrels per day (Mbbl/d) to 8.77 MMbbl/d, while 2017 crude output will fall by 260 Mbbl/d to 8.51 MMbbl/d, according to the EIA's recent short term energy outlook report.

Previously, the EIA forecast a decline of 700 Mbbl/d to 8.73 MMbbl/d in 2016 and a decline of 420 Mbbl/d to 8.31 MMbbl/d in 2017.

The revised forecast came after global benchmark Brent prices rallied by as much as 23% since the start of August, hovering just around $48/bbl on Sept. 7.

"The decline in U.S. oil production this year and in 2017 is not expected to be as steep as in previous forecasts because of improved drilling rig efficiencies and more rigs drilling," EIA Administrator Adam Sieminski said in a statement.

He added that oil inventories are expected to grow in the second half of 2016, limiting upward moves on oil prices.

The EIA also raised its 2016 and 2017 U.S. oil demand growth outlook, with 2016 expected to rise by 200 Mbbl/d to 19.6 MMbbl/d and 2017 expected to rise by 140 Mbbl/d to 19.74 MMbbl/d.

During the week of Aug. 29, Baker Hughes Inc. reported that the U.S. oil drilling rig count rose for a ninth week in ten.