Oil prices fell 4.6 percent on Wednesday after U.S. government data showed a 10th straight week in crude builds, but traders cautioned of volatility ahead of this week's OPEC meeting from suggestions of any production cuts.
Crude also hit session lows, breaking below $40 a barrel, after the release of the Fed's Beige Book.
The dollar's surge to 12½-year highs after pro-rate hike comments by U.S. Federal Reserve Chairperson Janet Yellen also weighed on oil and other dollar-denominated commodities, as it makes them less affordable to those holding the euro and other currencies.
U.S. crude oil inventories rose 1.2 million barrels last week, for a tenth straight week on higher imports and in spite of a jump in refining rates that also boosted stocks of gasoline and distillates, data from the Energy Information Administration (EIA) showed.
"It is another data point pointing to a continued glut in the U.S. markets for oil as production declines remain stubborn even with oil prices hovering at current levels for a significant amount of time now," Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland said.
Inventories at the Cushing, Oklahoma, delivery hub for U.S. crude futures accounted for a third of the build, rising 428,000 barrels, the EIA reported.