U.S. oil futures extended losses after data from the American Petroleum Institute showed a 3.8 million inventory build.
The front-month contract for West Texas Intermediate (WTI) fell to $29.63 after it settled at $29.88 a barrel, down 5.5 percent, or $1.74.
Brent for April delivery dropped $1.79, or 5.23 percent, to $32.43 a barrel, after touching a low of $32.23, down 5.9 percent, in the session.
In pre-settlement trade, oil fell sharply for the second straight day on Tuesday as hopes of a deal to curb one of the worst supply gluts in history continue to fade and concerns about weak demand amid a mild winter deepen the rout.
The oil markets erased most of last week's four-day rally, during which prices soared almost 20 percent from the lows touched in mid-January after Russia's Energy Minister said OPEC kingpin Saudi Arabia suggested a production cut.
This week though, those hopes have dimmed as no deal has emerged and talks between Russia's energy minister and Venezuela's oil minister on Monday failed to produce any clear plan to reduce output.
With forecasters projecting the weather in the United States will moderate during the last eight weeks of the November-March winter heating season, U.S. heating oil futures were down 2 percent and gasoline was 6 percent lower.