Global oil benchmark, Brent crude, extended its declines on Wednesday, trading around $43 per barrel, down from a 2016 peak of $52.54.
Oil prices plummeted over $1 per barrel within minutes after official United States energy data showed an unexpected glut of oil in storage, according to The Telegraph.
The price of Brent crude quickly dropped from around $44.90 per barrel to $43.68, a decline of more than two per cent, after the surprisingly high storage data was revealed, dragging the market deeper into multi-month lows.
US crude oil stocks rose by 1.7 million barrels to 521.1 million barrels last week, according to the US Energy Information Administration, a development that shocked analysts who had expected the weekly report to show that stocks had fallen by 2.3 million barrels.
Separate data from the American Petroleum Institute had also buoyed hopes that oil stocks might be waning, stating on Tuesday that stocks fell by 827,000 barrels.
Brent crude had on June 8 climbed by as much as 2.1 per cent to touch $52.54, the highest price since last October. The US oil benchmark, West Texas Intermediate, also rose by nearly two per cent to $51.34 per barrel, its highest intraday price since last July.
The oil price had already seen its tentative recovery threatened by the rising US dollar and jittery demand forecasts, falling to $44.75 per barrel on Monday, its lowest level since oil traded at $43.63 per barrel on May 9.
Oil prices have rallied from lows of under $28 per barrel in January to trade above the $50 per barrel mark in June, spurred by a string of international oil production outages in the second quarter that offered temporary respite from the global glut.
The return of oil production in Canada and Nigeria after supply disruptions, combined with a strengthening US dollar, has pushed the market into reverse and sparked fears that further losses could undermine the global price recovery.