Oil prices slid about 4% on Wednesday, with losses accelerating after U.S. data showed crude and gasoline stockpiles unexpectedly surged last week and as OPEC+ said it would raise its oil output target by 100,000 barrels per day (bpd).
Brent crude futures settled down $3.76, or 3.7%, at $96.78 a barrel. West Texas Intermediate (WTI) crude futures fell $3.76, or 4%, to $90.66. Both contracts had seesawed earlier in the session.
The premium for front-month Brent futures over barrels loading in six months' time is at a three-month low, indicating waning concern about tight supply. The same premium for WTI futures neared a four-month low.
U.S. crude oil inventories rose unexpectedly last week as exports fell and refiners lowered runs, while gasoline stocks also posted a surprise build as demand slowed, the Energy Information Administration said.
Crude stocks rose 4.5 million barrels last week, compared with an analyst forecast for a draw of 600,000 barrels. Gasoline stocks gained 200,000 barrels, versus expectations for a 1.6 million-barrel drop.
"The crude oil number is well above expectations. Gasoline is a disappointment. You should never see a build in gasoline during summer. It's a very bearish report," said Bob Yawger, director of energy futures at Mizuho.
Ministers for the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, agreed to the small increase to the group's output target, equal to about 0.1% of global oil demand.
While the United States has asked the group to boost output, spare capacity is limited and Saudi Arabia may be reluctant to beef up output at the expense of Russia, hit by sanctions over the Ukraine conflict.
The Biden administration is focused on keeping oil prices down, the White House said.
Ahead of the meeting, OPEC+ trimmed its forecast for the oil market surplus this year by 200,000 bpd to 800,000 bpd, three delegates told Reuters.
Also weighing on prices, Iranian and U.S. officials said they were travelling to Vienna to resume indirect talks about Iran's nuclear program, reviving the all but vanished hopes of a removal of sanctions hampering Iranian oil exports.
On the demand side, Federal Reserve officials voiced their determination again on Wednesday to rein in high inflation, although one said a half-percentage-point hike in the U.S. central bank's key interest rate next month might be enough to march on toward that goal.
The U.S. dollar index, which tracks the greenback against six major peers, also rose, pressuring demand by making oil more expensive for holders of other currencies.
However, oil prices were helped by Caspian Pipeline Consortium (CPC), which connects Kazakh oil fields with the Russian Black Sea port of Novorossiisk, saying that supplies were significantly down, without providing figures.