Oil prices fell on Wednesday, continuing their recent slide after surging U.S. crude output hit another record and domestic inventories rose more than expected.
In early trade, prices had risen after a report that Russia and Saudi Arabia are discussing whether to cut crude output next year. Then the U.S. Energy Information Administration reported that domestic crude inventories rose 5.8 million barrels in the latest week, more than double analysts' expectations.
Crude output hit 11.6 million bpd, a weekly record, though analysts will watch to see if monthly data confirms that.
U.S. West Texas Intermediate crude ended Wednesday's session down 54 cents, or nearly 1 percent, at $61.67, its lowest closing price since mid-March. WTI touched a nearly eight-month low at $61.20 on Wednesday, falling more than 20-percent from its recent high and briefly trading in bear market territory.
"The market has yet to prove that it can hold onto a rally, so the short-term mood is still very negative," said Phil Flynn, analyst at Price Futures Group in Chicago.
Brent crude, the global benchmark, were down 13 cents to $72 a barrel by 2:22 p.m. ET. The contract hit $71.36 on Tuesday, near its lowest since Aug. 16.
The market has yet to prove that it can hold onto a rally, so the short-term mood is still very negative," said Phil Flynn, analyst at Price Futures Group in Chicago.
Brent crude, the global benchmark, fell 49 cents to $71.64 a barrel.
While Iranian oil exports are expected to fall after U.S. sanctions took effect on Monday, reports from OPEC and other forecasters have indicated the global oil market could have a surplus in 2019 as demand slows.
Russia and Saudi Arabia, the top producers in an OPEC-led alliance, started bilateral talks on a return to production cuts next year, Russia's TASS news agency reported, citing an unnamed source. In June, the producer group decided to relax output curbs in place since 2017, after pressure from U.S. President Donald Trump.
Analysts said those countries may be more willing to cut output now that the U.S. midterm elections are over. Trump, whose Republican party was fighting to retain control of congress, had complained of higher gasoline prices.
"OPEC was feeling the Trump pressure but producers took action with the thinking that they just needed to get past the U.S. election," said Joe McMonigle, analyst at Hedgeye in Washington, in a note Wednesday. "We expect to start hearing public comments from OPEC ministers this weekend" about pulling back on the recent production boost.
A ministerial committee composed of some members of the Organization of the Petroleum Exporting Countries and allies meets on Sunday in Abu Dhabi to discuss the outlook for 2019.
Supply from countries such as Saudi Arabia has risen sharply since June. Also, Washington granted waivers from its sanctions on Iran to eight oil customers of that major supplier
— CNBC's Tom DiChristopher contributed to that report.