Brent breaks below $30; US oil settles at $30.48

Brent oil prices fell on Wednesday and U.S. crude pared gains after a massive build in U.S. gasoline and diesel inventories fed into bearish sentiment brought oil prices close to 12-year lows.

Both contracts saw intra-day highs of more than $1 above Tuesday's closing price on upbeat Chinese economic data earlier in the session.

By 2:30 p.m., Brent crude, the global benchmark, was down 63 cents at $30.22 a barrel, while U.S. West Texas Intermediate crude (WTI) settled at $30.48, up 4 cents, or 0.13 percent. Brent also broke below $30 for the first time since April 2004.

Data showing that crude inventories rose 234,000 barrels last week, much less than expectations, was overshadowed by reported builds of 8.4 million barrels in gasoline and over 6 million in distillates, which includes diesel and heating oil.

Ultra-low sulfur diesel was trading at lows going back to 1994 following the report.

"Overall, it's a bearish report. I think today's inventory report is all about products...The long awaited massive decline in crude production is not starting again," said Dominic Chirichella, senior partner at Energy Management Institute in New York.

This was a second week of huge builds in refined fuel with gasoline surging the most since 1993 in the previous week.

"Last week's build was massive, and this week's was much larger than the seasonal norm," said John Saucer, Vice President at Mobius Risk Group in Houston.

The dynamics of supply have shifted as diesel stockpiles have surged past year-ago levels, indicating a products surplus, Saucer added.

Analysts at Morgan Stanley also warned that a rise in demand for crude could be lower than previously expected.

"Any slowing in the rate of demand growth could delay the timing of rebalancing and ultimately a price recovery," they said in a research note.

The potential for the calling of an emergency OPEC meeting also weakened on Wednesday when Iran's oil minister was quoted as saying he had not received any request for such a gathering.

Nigeria's oil minister said on Tuesday that a "couple" of OPEC members had asked for an emergency meeting.

Days ahead of the expected implementation of a landmark nuclear accord between Tehran and world powers, Iran briefly detained a group of U.S. sailors after they entered Iranian waters.

Iran released the sailors on Wednesday after holding them overnight, determining they had entered Iranian waters by mistake.

Crude prices had earlier rallied after data showed Chinese crude imports rose to a record 7.82 million barrels in December, up more than 21 percent from November.

The world's second-biggest oil consumer has been taking advantage of the oil price rout to stock reserves and increase exports of refined products and may be set to overtake the U.S. as the world's largest importer.

—CNBC's Tom DiChristopher contributed to this report.