The dominant trend remains bearish for oil prices as uncertainties over global trade prospects as well as output cut deal extension among world's major oil exporters linger, analysts have said.
Oil prices logged the lowest finish since January on Wednesday, with West Texas Intermediate (WTI) for July delivery settling 4 percent lower at 51.14 U.S. dollars a barrel and Brent crude for August delivery declining 3.72 percent to close at 59.97 dollars a barrel.
WTI is trading 23 percent lower from its April peak, while Brent is down 20 percent.
U.S. crude supplies reported large increases for the second week in a row, despite the increase in the refinery utilization rate, a fall in net imports and lower production.
The U.S. Energy Information Administration (EIA) said on Wednesday that the amount of U.S. commercial crude oil inventories increased by 2.2 million barrels last week.
It was below the 4.9 million barrels' increase reported by the American Petroleum Institute on Tuesday, but much higher than analysts' expectations.
At 485.5 million barrels, U.S. crude oil inventories were about 8 percent above the five-year average for this time of year.
The data gave rise to market's prolonged concerns of overproduction and weighed on prices.
"Just the thought of overproduction in this deteriorating global economic environment suggests, unless OPEC (The Organization of the Petroleum Exporting Countries) and allies can bridge the agreement gap, markets will head south in a hurry," Marketwatch cited Stephen Innes, managing partner, Vanguard Markets Pte, as saying in a note to clients before the EIA data.
OPEC and some non-member oil exporters including Russia (OPEC ) have withheld supplies since the beginning of the year in order to balance supply and demand, and support oil prices.
These countries were supposed to meet before the deal expires and choose whether to extend production cuts into the second half of year.
Analysts said higher U.S. crude stocks means that OPEC will rollover its production quota.
"We think that stocks are still high enough to convince OPEC to, at the very least, rollover their current production quota. Indeed, OPEC have a target for commercial stocks to go below their five-year average and currently this is nowhere near the case in the U.S.," Capital Economics said in its energy data response.
Saudi Arabian Energy Minister Khalid al-Falih said on Monday that Russia was the only oil exporter still undecided on whether or not major exporters should extend the output deal, according to media reports.
"We work to prevent such a decline in prices, which could negatively affect the interests of both consumers and producers," Al-Falih said at a joint press conference with Russian Energy Minister Alexander Novak on Monday.
Novak said that there are big risks of oil overproduction and the possibility of prices declining.
While a rollover seems almost certain, major oil exporters are still undecided about the meeting date after Russia, the biggest non-OPEC producer in the coalition, sought to shift the meeting to early July. Most of the countries that were initially against Russia's proposal agreed on the date except Iran, media reports have said.
Analysts said the geopolitical tensions in the Middle East remained a major concern for the supply side.
On the demand side, the market has been worrying about the negative impact global economic slowdown has on oil demand.
EIA cut its 2019 world oil demand growth forecast by 0.2 million barrels per day (bpd) to 1.2 million bpd in its short-term energy outlook released on Tuesday.
The report said the administration is reducing its 2019 Brent crude oil price forecast to 67 U.S. dollars a barrel, which is 3 dollars lower than its May estimate.
"The lower 2019 price forecast largely reflects recent global crude oil price declines as well as the uncertainty about global oil demand growth," the report said.
Earlier this month, the World Bank lowered its global growth forecast for 2019 to 2.6 percent, saying heightened policy uncertainty, including a recent re-escalation of trade tensions between major economies, has been accompanied by a deceleration in global investment and a decline in confidence.
