Oil retreats on record U.S. crude buildup, worries over OPEC production cut

Oil futures tumbled Wednesday after a report on U.S. crude inventories showed a record weekly buildup.

The December contract for light sweet crude fell almost three per cent, dropping$1.33 to close at $45.34 US a barrel after a brief slip under $45 US.

The U.S. Energy Information Administration said the U.S. crude supply jumped by 14.4 million barrels last week.

"This is the largest weekly crude build since the EIA began reporting weekly oil stocks in 1982," saidTony Starkey, manager of energy analysis at Platts Analytics, in a commentary.

"This was almost entirely driven by a resurgence in imports, which nearly hit 9 [million barrels per day] last week.That was the highest level of crude imports since September of 2012," he said.

Starkey said the bigger story for oil remains OPEC,and whether the cartel will follow through on a proposed production cut at a meeting slated for the end of this month.

"All signs point to increasing OPEC production heading into that meeting, thanks largely to Nigeria and Libya, two presumed exempt countries, which makes production quotas that would be meaningful to market balancing all the more difficult," he said.

The price of oil has retreated more than 10 per cent in the last two weeks, according to Reuters.