US crude oil futures fell by nearly $2 on Wednesday as a higher-than-expected build in inventories weighed down prices, although Brent's losses were lessened by unrest in Libya. The 3 million-barrel build in crude stocks briefly lifted US crude, or West Texas Intermediate (WTI), as it followed Tuesday's data from industry group the American Petroleum Institute showing stocks rose by 6.9 million barrels last week.
Analysts expected an increase of 600,000 barrels.
US crude swiftly resumed its downward trend, falling by nearly $2 to a session low of $91.77.
"Brent is actually holding up remarkably well in the face of WTI weakness," said Andy Lebow, vice president at Jefferies Bache in New York.
US Energy Information Administration (EIA) data showed US crude stocks rose for a tenth straight week to 391 million barrels, their highest for this time of year since records began in 1982.
Brent crude was down 28 cents at $110.60 a barrel by 1:26 pm EST (1826 GMT), reversing course after earlier hitting $111.54.
US oil fell $1.72 to $91.96 a barrel after going as low as $91.77.
Oil trading on the New York Mercantile Exchange will shut at 1:30 pm EST, one hour earlier on Friday, November 29, the day after the Thanksgiving Day holiday.
Brent's continued out performance of WTI widened the spread between the two benchmarks to a new eight-month high of $18.93 on Wednesday.
Brent's premium to WTI stood at $18.64, over $1 wider than its Tuesday close of $17.20.
US distillates inventories fell last week to their lowest level for November since records began in 1982 as export of refined products reached a historic peak, data from the US EIA showed on Wednesday.
Phil Flynn, an analyst at Price Futures Group in Chicago, said the export phenomenon meant refiners are storing distillates at levels closer to domestic needs.
"We're really seeing a changing dynamic in the market ... We're now an exporter and we have this reliable supply of oil, so the tendency is not to carry as much," he said. "It goes directly from refiner to user."
The weakness in US oil eventually dragged Brent lower after it posted early gains, Commerzbank senior oil and commodities analyst Carsten Fritsch said.
Brent crude gained support from disruptions in Libya, where protests at oil ports have reduced oil flows from the OPEC member to 20 percent of previous levels, according to Libyan Prime Minister Ali Zeidan.
Zeidan said on Wednesday his government will be unable to pay public salaries and might have to seek loans if armed militias blockading oilfields and ports continue to choke off crude shipments.
Zeidan's warning and renewed armed clashes, including an attack on a centuries-old shrine near Tripoli, have added to a growing sense of chaos in the OPEC producer two years after the Nato-backed ouster of Muammar Gaddafi.
"I don't expect the situation in Libya to improve anytime soon," Fritsch said. "Because of the sectarian and decentralised protests, there's no way to find a common solution."
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