Oil closed at its lowest level since June on Wednesday despite government data showing total crude inventories in the US dropped by 4.6 million barrels last week.
The Energy Information Administration data also showed gasoline stockpiles rising by more than 5 million barrels last week versus estimates of a build of 1.3 million. The rise in fuel inventory comes amid lower seasonal demand and after refineries revamped their production.
West Texas Intermediate (CL=F) fell 4%, settling at $69.38 per barrel. Brent (BZ=F) crude, the international benchmark price, was down more than 3.6%, closing at $74.30 per barrel level.
Crude prices had opened lower on Wednesday prior to the release of the EIA data on concerns of oversupply and weaker demand. Moody's gave China's credit rating a downgrade warning on Tuesday as concerns about the country's economic growth mount.
“Economic numbers from China are showing a further slowdown as Asian refinery run rates continue to drop with Saudi cutting cash crude prices for next month to China,” said Dennis Kissler, senior vice president at BOK Financial's trading division. He also noted that seasonally, oil prices tend to decline in late December.
Meanwhile, ADP employment data released Wednesday showed an increase of 103,000 jobs in the US last month, compared to expectations of 130,000. The prior month’s add-ons were revised down to 106,000 jobs, versus 113,000 previously reported.
A weaker US job market points to lower demand amid an economic slowdown.
Oil has been on a downward trend over the last couple of months, despite output reductions from OPEC+, and deepened reductions announced last week.
Last Thursday OPEC+ agreed to additional output curbs of 1 million barrels per day in a move aimed at sending prices higher. The deeper reductions come alongside an extension of Saudi Arabia's unilateral reduction of 1 million barrels per day.
A lack of mention of the additional cuts in the official press release following OPEC+'s meeting led traders to believe those reductions were voluntary in nature as each country announced quotas individually.
Since the oil producer alliance's decision, both WTI and Brent have declined by about $5 each, or roughly 6%.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance