The market shrugged off bullish US government data showing crude stockpiles slumped by almost 13 million barrels last week, the biggest slide in almost two years. That decline was larger than expected, causing crude futures to gain in post-settlement trading.
Brent crude (LCOc1) fell $4.10, or 5.2 percent, to $74.76 a barrel by 1:40 p.m. EDT (1740 GMT).
"The market fell out of bed yesterday as support failed (but was)... probably overdone to the downside", said Robin Bieber, technical analyst at London brokerage PVM Oil Associates.
All three major stock indexes rose on Tuesday, and the S&P 500 posted its highest close since February 1.
Adding to the Bearish mood were signs of a possible relaxation of United States sanctions on Iranian Crude Oil exports. But it all depends on which countries they're talking about.
Meanwhile, America signaled it would take a softer approach to buyers of Iranian crude. "Is it India?. Is it temporary waivers?"
Prices were further pressured after U.S. Secretary of State Mike Pompeo said on Tuesday that Washington would consider requests from some countries to be exempt from sanctions due to go into effect in November to prevent Iran from exporting oil.
Still, Brent was buoyed by a strike by hundreds of workers on Norwegian offshore oil and gas rigs, leading to the shutdown of one Shell-operated oilfield.
"We remain sceptical that the Tripoli-based National Oil Corporation, which has lost control over key oil ports to militia who are backing a rival national oil company, will be able to double its output as intended".
"In 2019, EIA forecasts that the United States will average almost 12 million barrels of crude oil production per day", said Linda Capuano, Administrator of the EIA.
The updated timeline has muted USA price gains and widened the difference between the two benchmarks, said Yawger.
Saudi Arabia, fellow members of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russian Federation agreed last month to increase output to dampen price gains and offset global production losses in countries including Libya.
OPEC on Wednesday forecast world demand for its crude will decline next year as growth in consumption slows and rivals pump more, pointing to a market surplus returning despite an OPEC-led pact to restrain supplies.