U.S. crude stocks climbed by 5 million barrels to 361.65 million in the week to Oct. 3, Energy Information Administration data showed on Wednesday. This was much larger than the build of 1.5 million barrels expected by analysts polled by Reuters.
Stocks at Cushing, Oklahoma, the delivery point of the U.S. crude contract, fell by 1.6 million barrels.
Brent for November was down $1.30 at $90.81 by 1442 GMT, after hitting $90.57 earlier in the session, its lowest price since June 2012. U.S. crude was down $1.70 to $87.15 a barrel, after hitting its lowest level since April 2013.
The International Monetary Fund on Tuesday cut its global economic growth forecasts for the third time this year, warning of weaker growth in core euro zone countries, Japan and major emerging markets, such as Brazil.
Global stock markets fell heavily on the news. The Dow Jones index fell 1.6 percent on Tuesday and was flat on Wednesday, while European and Asian stocks fell on both days.
The EIA cut its global demand forecast for 2014 by 1.24 million barrels on Tuesday, and trimmed its Brent crude price forecast for 2015.
“There’s very bearish sentiment right across the market at the moment,” said Virendra Chauhan, oil analyst at Energy Aspects in London.
“A drop below $90 is possible for Brent,” said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt. “At that point, we could see stop-loss orders triggered and some follow-up selling.”
The Organization of the Petroleum Exporting Countries is due to meet in Vienna on Nov. 27, and analysts say the group couls significantly cut its output target from 30 million barrels per day (bpd).
“The recovery in prices must come from the supply side, meaning lower OPEC production,” Fritsch told Reuters Global Oil Forum, adding that an output cut of 1 million bpd would be necessary to shore up prices.
Iran and major powers are set to hold talks in coming days in Vienna, Iran’s foreign ministry said on Wednesday, in a sign that negotiations on the country’s nuclear programme are keeping momentum.
European Union sanctions on the National Iranian Tanker Company were annulled, the shipping company said on Tuesday.
Strong supply from Iraq and Libya helped to drive prices down from a high above $115 in June, but a shock remains possible in either country.
The U.S. and its allies stepped up airstrikes against Islamic State fighters in northern Syria as they closed on a town near the Turkish border on Wednesday.
The Turkish government’s reluctance to intervene against Islamic State has stirred up tensions with Turkey’s Kurdish minority. At least 19 people were killed in riots on Tuesday and Wednesday in Kurdish-majority areas in the southeast.
Libyan oil production slipped below 900,000 bpd last month due to a sit-in protest at Sirte Oil Co by local residents demanding jobs, a source at the National Oil Corporation said on Tuesday.