Benchmark West Texas Intermediate crude lost 22 cents to US$103.33 a barrel in midday trading on the New York Mercantile Exchange.
Brent crude, which sets the price of oil imported into the U.S., lost 28 cents to US$117.88 ar barrel in London.
Prices dipped after the U.S. Energy Information Administration reported that U.S. oil supplies increased by four million barrels last week. That was a surprise following an industry trade group's prediction late Tuesday that supplies had declined last week. The price of oil tends to fall as more supply becomes available to refineries.
Crude supplies climbed close to a record high in Cushing, Okla., where benchmark crude is delivered. High oil supplies in Cushing have pushed the benchmark price lower than other oil varieties.
Those supplies are expected to begin falling in May when the Seaway Pipeline begins carrying crude oil from Cushing to the U.S. Gulf Coast.
Supplies also rose last week on the East Coast, Gulf Coast, Midwest and Rocky Mountains.
Petroleum demand fell by 3.2 per cent when compared with the same time last year.
Investors will also be closely watching comments by the Federal Reserve about the strength of the U.S. economic recovery and monetary policy later Wednesday.
In other energy trading, heating oil was flat at US$3.1314 a U.S. gallon (3.79 litres) and gasoline futures gave up 3.05 cents to US$3.1288 a gallon. Natural gas added 2.9 cents to US$2.004 per 1,000 cubic feet.
(TSX:ECA), (TSX:IMO), (TSX:SU), (TSX:HSE), (NYSE:BP), (NYSE:COP), (NYSE:XOM), (NYSE:CVX), (TSX:CNQ), (TSX:TLM), (TSX:COS.UN), (TSX:CVE)Suggest a correction