Shortly after 1 p.m. ET, the July contract for West Texas Intermediate crude, the North American benchmark, was down $2.31 to $45.88 U.S. a barrel.
World fuel production and consumption is roughly in supply and demand balance, at nearly 98 million bpd, although inventories remain somewhat bloated, according to the US Energy Information Administration (EIA).
"We believe that USA inventories will continue falling this summer, allowing Opec to point to lower stocks as a positive measure of success", Sandy Fielden, director of oil and products research at Morningstar, said in a note.
Oil prices came under heavy selling pressure after an unexpected inventory build in the official United States data.
GSLV Mk3 launch: ISRO successfully launches heaviest rocket with GSAT-19 satellite
It was a textbook launch as every stage of the three-stage GSLV MkIII with indegeneous cryogenic engine performed well. At 3,136 kgs the GSAT-19 satellite will be the heaviest India has attempted to put in orbit, the space agency said .
OECD liquid fuels consumption will increase from 46.85 million barrels per day in 2016 to 47.14 million barrels per day in 2017 and 47.5 million barrels per day in 2018, the report said.
However, the market reacted badly as many expected OPEC to announce a deepening of production cuts with the price of Brent Crude falling 1.07% to $53.4 a barrel while West Texas Intermediate fell 1.29% to $50.7 a barrel.
Middle East tensions, however, have eased over the past few days, as Kuwait oil minister Essam al-Marzouq quelled fears about a potential disruption to the Opec led deal, insisting that Qatar was committed to the Opec agreement to restrict supply. The market expectation for crude stocks was a decline of 3.5 million barrels. US oil demand fell by 1.4 million barrel a day to 19.34 million barrel a day. Royal Dutch Shell Plc lifted restrictions on exports of a key Nigerian crude halted for more than a year, potentially undermining the efforts of other OPEC members to clear a glut.
"The relentless increase in USA oil production appears to have the market anxious that the Opec cuts will be completely nullified by the increased U.S. production", William O'Loughlin, analyst at Australia's Rivkin Securities, wrote in a note to clients on Tuesday.
Brent crude prices fell by a steep 4 percent to settle at $48.06 a barrel.