U.S. crude oil futures ended lower for the second day in a row on Wednesday as government inventory data showed surprise increases in crude and gasoline stocks and a larger-than-expected build in distillates.
Weekly demand for gasoline was flat and demand slipped for distillates, the product category in which heating oil falls, pressuring product futures.
On the New York Mercantile Exchange, August crude settled down $4.14, or 2.98 percent, at $134.60 a barrel, trading between $132, which was the lowest price since June 25, and $139.30. Nymex crude hit a record $147.27 last Friday.
On Tuesday, the contract fell $6.44, which marked the biggest fall in dollar terms since prices dropped $10.56 on Jan. 17, 1991.
In London, August Brent crude expired and settled down $2.56, or 1.85 percent, at $136.19 a barrel, trading from $132.50 to $139.26.
"The builds across the board present a consistent bearish picture," said Tim Evans, an analyst at Citi Futures Perspective.
The U.S. Energy Information Administration said that for the week to July 11, crude oil stocks rose by 3.0 million barrels, gasoline stocks gained 2.4 million barrels and distillates rose 3.2 million barrels.
Crude oil imports rose sharply, while refinery feedstock usage dipped, even as refinery capacity utilization rose slightly.
"The fact that the West Coast region accounted for less than 10 percent of the crude stock increase was also a bearish consideration ... as we had anticipated some rebound following (the previous week's) big PADD 5 decline," said Jim Ritterbusch, president of Ritterbusch & Associates.
Demand for gasoline was flat at 9.3 million barrels per day, while demand for distillates slipped to 4.1 million bpd from 4.3 million bpd the week before.
August RBOB ended down 10.54 cents, or 3.11 percent, at $3.2794 a gallon, trading from $3.2158 to $3.3995. RBOB hit a Nymex record $3.6310 on Friday.
August heating oil finished 7.80 cents lower, or 1.99 percent, at $3.8410 a gallon, trading from $3.7603 to $3.9491. It hit a record $4.1586 on Friday.
The heating oil crack spread ended at $26.72, after Tuesday's close at $25.85. The RBOB crack spread dipped to $3.13, after ending Tuesday at $3.42.
The dollar extended gains Wednesday afternoon as minutes from the Federal Reserve's June meeting showed policy-makers believed the next interest rate move could be an increase.
Earlier, the dollar rallied against the euro and yen after Federal Reserve Chairman Ben Bernanke told a House of Representatives panel that currency intervention may be warranted under certain conditions, and on higher oil prices.
On Tuesday, Bernanke had sparked a sharp fall in U.S. equities and energy markets sold off after he spelled out economic risks facing the United States.
Meanwhile, Iran's highest authority said Tehran would maintain its disputed nuclear work, speaking ahead of a meeting of world powers to be attended by the United States, in a policy shift.