U.S. crude oil inventories jumped by 7.1 million barrels last week, three times the amount expected.
Oil prices fell heavily March 28 as U.S. crude inventories rose by the biggest amount in 20 months, and France announced that it was ready to tap strategic reserves to ease market tensions.
New York's main contract, West Texas Intermediate crude for delivery in May, dived $2.56 to $104.77 a barrel.
Brent North Sea crude for May shed $1.76 to $123.75.
The U.S. Department of Energy said the country's crude oil inventories jumped by 7.1 million barrels last week -- three times the amount expected.
"The largest weekly build in crude stocks since July 2010 was unexpected," said BNP Paribas analyst Harry Tchilinguirian.
With Western countries' stockpiles high, France on March 28 said it was ready to tap into its strategic oil reserves to help bring down prices.
Speaking after a cabinet meeting, France's Energy Minister Eric Besson said: "It was the United States that requested this and France greeted the idea favorably. We are now waiting for the opinion of the International Energy Agency."
Government spokeswoman and Budget Minister Valerie Pecresse said France was working with the United States and Britain to persuade the IEA to permit them to tap their reserves "to counter speculation on global energy markets."
It marked an evolution of France's position. Last week, Besson said that Paris was merely studying the possibility of opening its reserves as "one of the options" to tame rising oil prices.
In theory, a nation's reserves are held in case of a major international crisis like a war or a natural disaster in an oil producing area.
But Asia's fuel-hungry economies are once more gathering steam, pushing up prices at a time when the economic recovery remains more vulnerable in some western economies, such as those of France and the United States.
Tensions are also running high in the Middle East, with Iranian exports limited by embargo and political unrest in several oil producers.
France and the United States are also in election mode, with both President Barack Obama and his French counterpart Nicolas Sarkozy facing pressure from voters over high pump prices for gas and diesel.