Weekly crude oil inventories in the U.S. increased three times more than market expectations, according to the country's Energy Information Administration (EIA) data Wednesday.
For the week ending March 18, commercial crude oil stocks in the U.S. rose by 9.4 million barrels, or 1.8 percent, to reach 532.5 million barrels, from the previous week's 523.2 million barrels, marking their sixth consecutive weekly rise.
However, the market expectation was stocks to increase 3.1 million barrels during the period.
"A large jump in U.S. net crude oil imports last week was the main reason for the surge in stocks," said London-based Capital Economics' U.S. Weekly Petroleum Status Report.
"Net imports were at their highest weekly level since September 2013. In addition, inputs to refineries slipped back by a sizeable amount," said Thomas Pugh, author of the report and commodities economist at Capital Economics.
The EIA noted that the U.S.' crude oil imports rose by 691,000 barrels per day (bpd) on average to reach almost 8 million bpd for the week ending March 18.
During the same period, domestic oil production remained almost unchanged a little below 9.1 million bpd.
As the weekly crude stocks beat the market expectations and added to the glut, oil prices extended their losses on Wednesday.
After the release of the EIA data, American benchmark West Texas Intermediate fell to as low as $40.03 a barrel before 1700 GMT to mark more than a 3 percent daily decline. Global benchmark Brent crude declined to as low as $40.59 with a 2.7 percent slide.
The U.S. oil producers had some breathing room in the last couple of weeks as prices reached their highest levels for this year, due to weaker U.S. dollar and hopes that Saudi-Russian cooperation in April to freeze output levels would curb oversupply.
However, while glut remains high in global oil market, demand is still low with slowdown in major economies such as China and Europe, and U.S. dollar is still high, lowering the purchasing power of oil importing countries.
"A stronger dollar was already weighing on prices and today’s report has done little to reverse that trend," Pugh said.
"The big picture is that the U.S. oil market is still oversupplied," he concluded.