Oil fell below $110 a barrel on Wednesday as oil stockpiles swelled in top oil consumer the United States, where a struggling economy is limiting demand for fuel.
Further pressure came from concern a prolonged oil pipeline outage in the U.S. Midwest would cause inventories to build up near the delivery point of the benchmark contract in Cushing, Oklahoma.
Brent shed $1.06 to trade at $109.63 by 1236 GMT, while U.S crude slid 60 cents to $96.59.
"At the moment, the market is mostly focused on the potential of the surplus of crude oil in the U.S. starting to once again increase," said Dominick Chirichella of Energy Management Institute.
Crude oil stocks in the United States rose 4.7 million barrels last week, according to data from industry group the American Petroleum Institute, much higher than the 2.2 million forecast by a Reuters poll.
Supply is also growing in Europe, which was reflected in a shrinking spread between May and June Brent futures. The gap between the two contracts narrowed to a nine-month low of just 8 cents in Wednesday's trade.
A slew of recent weak economic data shows oil prices may face further headwinds.
Britain's manufacturing activity shrank for a second straight month, a survey showed on Tuesday, while U.S. factory activity grew at its slowest rate in three months in March, indicating a murky outlook for oil demand.
Europe's demand for oil has also been hit by seasonal refinery maintenance, traders said.
The Brent-U.S. crude spread narrowed slightly to $13.41 a barrel from its settlement in the previous session.
Brent's premium to U.S. crude rose to a more than one-week high of $14.66 on Tuesday amid uncertainty surrounding the impact of the ruptured Exxon Mobil Pegasus pipeline in the U.S. Midwest.
"We could see prices for WTI come under pressure over the trading day, given the expected uptick in crude inventories following the (pipeline) shutdown," said JBC Energy analysts.
Investors said the pipeline shutdown could potentially contribute about 300,000 to 400,000 barrels a week to crude inventories at Cushing.
Exxon said it was developing a plan to excavate, remove and replace the ruptured portion of the pipeline, while a U.S. pipeline agency said Exxon would need to test and submit a remedial work plan before it could resume operations. (Additional reporting by Luke Pachymuthu in Singapore; editing by James Jukwey and Keiron Henderson)