Traders also cited data from market intelligence firm Genscape showing a build of 230,025 barrels at the Cushing, Oklahoma storage hub for US crude futures, during the week to 1 July.

"There are risk-off trades across the board," said David Thompson, executive vice-president at Washington-based commodities broker Powerhouse. "Stocks, commodities, sterling are all off while US bonds and T-bills are soaring."

Brent futures settled down $2.14, or 4.3%, at $47.96 a barrel while US crude fell $2.39, or 4.9%, to end at $46.60.

Oil prices are up almost 80% from 12-year lows of around $27 for Brent and $26 for US crude in the first quarter. The rebound was fueled by supply outages from Canada to Nigeria that created the perception that a two-year-old supply glut may be easing.

Yet, a partial recovery in Nigerian output helped boost Opec crude production last month, a Reuters survey found.

"The increase in Opec production threatens to postpone the anticipated rebalancing of the global market," said Tim Evans, energy futures specialist at Citi Futures in New York.

In Libya, where oil output has slowed to a trickle due to conflict, the National Oil Corporation agreed to merge with its domestic rival, raising hopes the Opec member could start to pump more.

A Reuters review of disclosures by the largest 30 US shale firms showed 17 increased their hedge books in the first quarter, the most at least since early 2015.

Several, including EOG Resources and Devon Energy, two of the biggest shale companies, secured significant protection of future earnings for the first time in at least six months.

"You have to remember that sentiment in this market is still so fragile," said Michael Tran, director of commodity strategy at RBC Capital Markets in New York.

"Producers ended up locking in something in case we did a double dip."

Among refined oil products, several tankers carrying petrol-making components have dropped anchor off New York harbour, unable to discharge as onshore tanks were full.