A crude sell-off that began yesterday has continued today as oil prices fall to lows last seen in November.
Benchmark Brent crude futures briefly traded 2.14 per cent lower at $49.87 a barrel while West Texas Intermediate prices fell 2.09 per cent to $47.23 a barrel.
US crude inventories rose by almost 5m barrels to a total of 533.1m in the week to 17 March, according to data released today by the Energy Information Administration (EIA).
Analysts expected an increase of 2.8m barrels.
This comes after similar figures reported yesterday by the American Petroleum Institute (API).
"The American Petroleum Institutes' crude inventories stuck the knife into crude overnight... If the API stuck the knife in, tonight's EIA Crude Inventory figures may twist it. A blowout above the 2.1m barrel increase expected, may well torpedo oil below the waterline," said Jeffrey Halley, senior market analyst at Oanda.
"The market remains nervous about rising US production, which is also reducing the effectiveness of output cuts by the Opec and some non-Opec countries," said Abhishek Kumar, analyst at Interfax Energy.
The Organisation of the Petroleum Exporting Countries (Opec) is working to reduce oil production from its member countries by around 1.8m barrels per day (bpd) to prop up prices and cut the global glut.
However, prices have now returned to hit their lowest since 30 November when the deal was agreed. Sources told Reuters Opec is leaning toward extending the production cuts for another six months.
A report earlier this week suggested Opec's production cuts are unlikely to bump prices above $60 a barrel this year.