Crude oil futures tumbled on Wednesday as banking troubles in Greece further highlighted the euro zone debt crisis, pulling U.S. equities lower as risk aversion hit across markets.
The European Central Bank confirmed a Reuters report that it has stopped providing refinancing to some Greek banks as they are severely undercapitalized, keeping oil and other commodity prices pinned down.
The ECB move had erased an uptick in oil prices in morning trading after U.S. data showed that domestic stockpiles rose much less than what an industry group reported late on Tuesday.
Uncertainty in Greece, already shaken by the inability of politicians to form a government, pulled the euro to near a four-month low against the U.S. dollar while Wall Street sharply slashed gains. That, in turn, provoked a further sell-off in oil futures.
"The S&P 500 turned negative, deepening the weakness in the stock market on concerns about Greece and that has speeded up the pace of oil's slide today," said Mark Anderle, broker at TAC Energy in Dallas.
At 2:30 p.m. EDT (1830 GMT), ICE Brent for June delivery traded down $59 cents at $111.65 a barrel, after volatile trading between $110.41 and $112.10.
The July Brent contract was down $1.76 at $109.69.
Falling for the fourth straight session, U.S. June crude settled at $92.81, down $1.17, the lowest front-month settlement since Nov. 2. It fell to $91.81 early, the lowest intraday since Nov. 3, and rose as high as $94.16.
Brent's premium against U.S. crude widened to more than $19, the widest since April 10.
U.S. crude was also under pressure after a weekly report from the U.S. Energy Information Administration showed that crude stocks at the Cushing, Oklahoma, delivery point for U.S.-traded crude rose 1 million barrels to a record 45.13 million barrels.
U.S. oil prices briefly swung into positive territory, recovering from session losses of more than $2 after the EIA data showed that crude stocks rose 2.1 million barrels last week, far less than the 6.6 million barrel build shown in the American Petroleum Institute's report on Tuesday and closer to analysts' forecasts.
Bigger-than-expected drawdowns in U.S. gasoline and distillate stockpiles were seen supportive initially as four-week average demand rose above last year's level for the first time this year, the EIA data showed.
But as the trading session neared the close, weakened technical support prompted a flurry of selling of U.S. heating oil and gasoline futures, said TAC's Anderle.
Also keeping oil prices lower was news that U.S. President Barack Obama was expected to seek support on Saturday for other Group of Eight leaders for releasing strategic oil reserves later this summer as a European Union embargo on Iranian crude comes into effect, according to a report from the Kyodo news agency, citing sources close to Japan-U.S. ties.
The White House declined to comment on the report.
© 2014 Thomson/Reuters. All rights reserved.