The price of US oil fell by more than two per cent this afternoon after an unexpected increase in crude stocks in the country reinvigorated worries about a global supply glut.
Today the US Energy Information Administration (EIA) released figures showing domestic crude supplies rose by 2.5m barrels in the week ended 19 August to a total of 523.6m barrels.
This was a mammoth increase in the 455,000 barrel fall that had been expected.
The rise was driven by a fall in gasoline production and a decrease in refiner inputs, the EIA said.
US West Taxes Intermediate (WTI) was trading down 2.85 per cent on the news to $46.73, while the price of Brent crude was down two per cent to $48.97.
Oil prices were already down this morning after data released by the American Petroleum Institute showed yesterday that US crude inventories rose by 4.46m barrels in the week ending 19 August.
Analysts had expected a fall of around 450,000 barrels.
"Crude oil has been amongst the most volatile markets this week as investors prepare themselves for Janet Yellen’s speech on Friday at the Jackson Hole Economic Symposium," David Morrison, senior market strategist at Spreadco.
"On Tuesday it whipsawed from negative to positive territory on a story that Iran was prepared to 'support joint action to prop up the oil market'. However, this headline missed out on another crucial quote from the (anonymous) source which said that even if an agreement was reached to freeze output, there was very little chance that anyone would stick to it."
The black stuff has had a bull run so far this month, after it climbed from below $42 per barrel at the beginning of August to reach $51 per barrel on Friday.