The rout for London-traded futures picked up speed as Tuesday's session drew to a close, with Brent ending the day down 1.5% The global benchmark has now fallen more than 20% since a late-April peak, meeting the common definition of bear market.
And while inventories might have a short-term impact, an ongoing trade war between the US and China is likely to continue to weigh on prices.
Bearish news for oil then, yet it has managed to stave off heavier declines due to supply side factors. "These fears are heightened by the International Energy Agency reporting that supply exceeded demand by about 0.9 million barrels per day (bpd) in the first six months of this year".
"The stats were a major disappointment to the market with crude and product builds", said Andy Lipow, president of Lipow Oil Associates in Houston.
Oil jumped more than $1 per barrel on Thursday on expectations that falling prices could lead to production cuts, coupled with a steadying of the yuan currency after a week of turmoil spurred by an escalation in U.S.
Meanwhile, U.A.E. Energy Minster Suhail Al-Mazrouei said on Twitter that "oil market fundamentals are good" and prices are undergoing a "temporary over-reaction, which is driven by speculation".
USA markets rebound after China moves to strengthen yuan
The Dow lost 332 points, or 1.3%, to 25,697. 10-year US T-bond yield erases more than 7% as flight-to-safety intensifies. Sydney's S&P-ASX 200 retreated 2.6% to 6,468.30 and markets in Taiwan, New Zealand and Southeast Asia also declined.
Brent crude futures had risen 10 cents, or 0.17 per cent, to $59.91 a barrel by 0149 GMT after earlier dipping to their lowest since mid-January at $59.07.
Elsewhere, data indicating a larger-than-expected drop in US crude stocks offered some support to oil prices.
U.S. West Texas Intermediate (WTI) crude futures finished $2.54, or 4.7%, lower at $51.09. Deputy Oil Minister Amir Hossein Zamaninia said in early May that Iran has mobilized all its resources to sell oil in a "grey market", to circumvent illegitimate U.S. sanctions against the country.
Crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.50 million barrels, EIA said. EIA expects monthly growth in Lower 48 onshore production to slow during the rest of the forecast period, averaging 50,000 b/d per month from the fourth quarter of 2019 through the end of 2020, down from an average of 110,000 b/d per month from August 2018 through July 2019.
Brent has plunged more than 12 per cent after US President Donald Trump said last week that he would slap a 10 per cent tariff on a further $300bn in Chinese imports from September 1, sending global equity markets into a tailspin, according to Reuters.