Oil prices briefly fell nearly 8 percent on Tuesday as equity markets remained weak and forecasts of swelling record high U.S. crude stockpiles faced expectations that global demand will not grow quickly enough to erase the overhang of crude any time soon.
Prices were little changed in post-settlement trade after the American Petroleum Institute (API) reported a rise in crude stockpiles last week.
Crude inventories rose by 2.4 million barrels in the week to Feb. 5 to 503.4 million, compared with analysts' expectations for an increase of 3.6 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 715,000 barrels, API said.
Gasoline stocks rose by 3.1 million barrels, compared with analysts' expectations in a Reuters poll for a 400,000-barrel gain.
The weekly inventory report comes before Wednesday's official stockpile numbers from the U.S. government's Energy Information Administration (EIA).
Brent crude futures were last down $2.07, or 6.3 percent at $30.81 a barrel by 6:21 p.m. ET, down from Monday's session high of $34.68. U.S. futures settled down $1.75, or 5.89 percent, at $27.94 a barrel, and were last up 37 cents, or 1.32 percent, at $28.31.
Gasoline fell almost 5 percent to around 91 cents per gallon.
Wall Street's key equity index, the S&P 500, closed down 0.07 percent after falling more than 1 percent over the past two sessions.
The dollar tumbled to a four-month low but that did not do much for oil prices which usually get a boost from the currency's depreciation versus the euro and others.
"For now, the oil market for today is keeping a continued and close watch on equities after yesterday's schizophrenic action, and awaiting the API numbers," said David Thompson, executive vice-president at Powerhouse, a commodities-focused brokerage in Washington.