The American Petroleum Institute (API) reported a build of 2.75 million barrels in United States crude oil inventories, compared to analyst expectations that markets would see a draw of 2.7 million barrels for the week ending June 9-a 5.45-million-barrel discrepancy that is bound to unsettle already unsettled markets.
According to Platts, Nigeria will experience a slight surge in price of Brent crude, despite the recent increase in supply of crude oil globally, a development, which has threatened cut in oil production introduced by the Organisation of Petroleum Exporting Countries (OPEC) for its members.
The U.S. Energy Information Agency published a weekly report Wednesday showing gasoline inventories unexpectedly surged by 2.1 million barrels.
Brent crude futures were at US$48.28 per barrel at 0523 GMT, down 44 USA cents, or 0.9%, from their last close.
Cash-strapped USA shale firms scaled back their hedging programs in the first quarter, leaving them more vulnerable to tumbling spot market prices just after OPEC reached a landmark deal to curb global supply.
Both crude benchmarks have lost all the gains made at the end of past year after the Organization of the Petroleum Exporting Countries agreed with other big producers to cut output in an effort to prop up prices.
Oil prices have already declined significantly to curb the drilling boom and put output on a more sustainable trajectory.
The move is meant to drain the market of excess supply.
"For total non-OPEC production, we expect production to growby 700,000 bpd this year, but our first outlook for 2018 makessobering reading for those producers looking to restrainsupply", the IEA said.
Saudi Arabia, which has voluntarily cut production below its OPEC target, told OPEC it lowered output further by about 66,000 bpd in May to 9.88 million bpd.
Libya and Nigeria are exempt from the OPEC-led production deal to ensure oil revenue flows to national security efforts.
"Production growth in Libya and Nigeria and continued rig additions in the US are complicating the picture, raising doubts on OPEC's strategy", AB Bernstein said.
Brent also slumped, losing $1.72, or 3.5 percent, to settle at $47 a barrel.
The price falls are due to ongoing high supplies despite the pledge to cut from within OPEC and because of rising output from the US.
It's not like the Saudis are enjoying significantly higher prices, with Brent crude ending on Tuesday at $48.72 a barrel, perilously close to the $46.38 close the day before the November 30 deal between OPEC and its allies.