The U.S. crude contract for April delivery, which expires later on Wednesday, fell by $4.82 to $104.60 a barrel by 11:11 a.m. EDT.
The more actively traded May contract was trading at $103.36, down $5.14 from the previous close, while London Brent crude for May delivery fell $4.49 to $101.07.
On Wednesday, the latest data from the U.S. Energy Information Administration (EIA) showed a 200,000 barrel increase in weekly crude stocks, much less than the 2.3 million barrel rise forecast by analysts polled by Reuters.
Gasoline inventories, which had been predicted to rise by 400,000 barrels, fell by 3.5 million barrels. Distillate stocks, which include heating oil, declined by 2.9 million barrels, more than the 1.5 million barrel fall predicted by analysts.
Analysts said part of the reason for lower inventories of refined products was a reduction in refinery activity because of poor profit margins as well as perception of reduced demand.
Oil prices have fallen sharply this week after U.S. crude hit a record high of $111.80 on Monday.
Price strength across the commodities complex was driven in part by the weakness of the U.S. dollar, which fell again on Wednesday.
But increasingly, investors who had viewed dollar-denominated commodities as the best place to put their cash, are worried demand for raw materials will be eroded by recession, analysts said.