Oil prices fell about 2 per cent as a surprise increase in US crude stockpiles fed concerns about global oversupply, while investors worried that trade tensions could hit energy demand.
Brent crude futures fell $US1.82 to settle at $US72.39 a barrel, a 2.5 per cent loss.
US West Texas Intermediate (WTI) crude futures fell $US1.10 to settle at $US67.66 a barrel, a 1.6 per cent loss.
US crude inventories rose 3.8 million barrels last week as imports jumped, the government’s Energy Information Administration said, against an expected decrease of 2.8 million barrels.
Still, oil futures pared losses briefly after the data, which also showed growing US demand.
‘It was surprising to see the build in crude, but it was a little bit offset by the bigger-than-expected draw in petrol and the draw in Cushing,’ said Tariq Zahir, managing member at Tyche Capital Advisors.
Petrol stocks declined 2.5 million barrels, while crude stocks at the Cushing, Oklahoma, delivery hub for US crude futures fell by 1.3 million barrels, EIA data showed.
On Tuesday, the EIA reported that US crude production fell 30,000 barrels per day to 10.44 million bpd in May.
Oil prices are also being pressured by concern that global trade tensions could crimp economic growth.
China said it would hit back if the US takes further steps hindering trade, as the Trump administration considers slapping a 25 per cent tariff on $US200 billion worth of Chinese goods.
Last month, Brent fell more than 6 per cent and US crude slumped about 7 per cent, the biggest monthly declines for both benchmarks since July 2016.
Russian oil production last month was on average above the level Moscow promised following the Organisation of the Petroleum Exporting Countries and non-OPEC meeting in June, energy minister Alexander Novak indicated on Wednesday.
Novak said that higher production was due to the need to maintain the market’s stability.
His comments indicate that Russia was producing above the level announced by Moscow after the OPEC+ meeting in June.
Last month, Novak had said that Russia may surpass the 200,000 bpd level of increases if there is a need for it.
A Kuwaiti official said the country increased production in July by 100,000 bpd from June’s average.
On Monday, a Reuters survey found that OPEC production reached a 2018 high in July. OPEC, plus Russia and other allies, decided in June to ease supply cuts in place since 2017.