Oil fell on Wednesday as the International Energy Agency (IEA) warned that a global supply glut continued to weigh on prices and data showed an unexpected weekly gain in U.S. crude stocks.
The IEA, which advises industrialized nations on energy policies, said crude inventories kept rising last month and pushed floating storage, one of the most expensive methods of stockpiling, to the highest level in seven years.
"(Stocks) are at such elevated levels, especially for products for which demand growth is slackening, that they remain a major dampener on oil prices," the Paris-based IEA said in its latest report.
Stocks of U.S. crude and refined products rose unexpectedly last week by 2.2 million barrels, data from the American Petroleum Institute, an industry group, showed late on Tuesday.
This provided further bearish impetus to the market a day after prices had risen 5 percent, giving investors a chance to lock in gains.
The U.S. government's Energy Information Administration (EIA) releases official weekly inventory data at 1430 GMT on Wednesday.
Global benchmark Brent oil LCOc1 was down 76 cents at $47.71 a barrel at 0850 GMT after settling up $2.22, or 4.8 percent, in the previous session.
U.S. crude CLc1 traded at $46.20 a barrel, down 60 cents on Tuesday's close.
The U.S. dollar .DXY rose, making dollar-denominated oil less attractive for holders of other currencies.
The IEA also raised its forecasts for 2016 and 2017 oil demand growth by 0.1 million barrels per day to 1.4 million bpd and 1.3 million bpd, respectively.
"Therefore any weakness based on the IEA report should be short-lived," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.
Credit Suisse raised its 2016 oil price forecasts on Wednesday. The bank forecast U.S. crude would average $43.59 per barrel this year versus $36.91 in its earlier forecast, and $55.00 for 2017, versus $52.88 earlier.
Brent will average $44.53 a barrel this year, up from $37.77, and average $56.25 in 2017, up from $54.25 earlier.