Oil prices sank as government data showed a far weaker US crude inventory draw than an industry report released Tuesday suggested.

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US commercial crude stockpiles fell by 2.2 million barrels to a total of 524.4 million in the week through July 1, the Energy Information Administration reported.

The American Petroleum Institute (API) said its data showed US crude stockpiles fell by 6.7 million barrels last week, declining for a seventh week in a row.

Brent crude oil futures fell USD 1.71, or 3.5 percent, at USD 47.09 per barrel at 12:24 p.m. ET (1624 GMT) on Thursday. US West Texas Intermediate (WTI) crude was trading at USD 45.80 per barrel, down USD 1.63, or 3.4 percent.

The EIA data also showed gasoline inventories fell by about 100,000 barrels and distillate fuel stocks decreased by 1.6 million barrels.

Preliminary weekly data showed US production fell by 194,000 barrels per day, primarily due to declines in Alaska's output. Monthly data that operates on a significant lag is more accurate.

Prices had earlier risen on Thursday, drawing support from the API report and a weaker US dollar, which makes oil more affordable for holders of other currencies.

"Oil demand growth remains robust," UBS said in a note, adding that "an historically high level of physical inventories ... is no bar to a rising price if the direction of travel in market adjustment is supportive."

The bank raised its price forecasts for 2016 and 2017.

However, traders warned that an economic slowdown and a glut in supplies of refined products were weighing on oil markets.

The EIA data may compound concerns about the fuel glut. The data showed gasoline supplies rose by 46,000 barrels per day to more than 9.75 million barrels per day.

Asian crude demand is slowing and by some measures falling, which market participants said could be due to an economic slowdown and perhaps even more permanent structural changes.

"Growth is slipping again ... and things don't seem quite so rosy," HSBC said in a note to clients.

While both stocks and sterling climbed on Thursday, oil industry observers warned that fall-out from Britain's vote to leave the European Union last month could weigh on oil prices if the market turmoil spread outside Europe.

German industrial output plunged unexpectedly in May for its steepest monthly drop since August 2014, data showed on Thursday, suggesting Europe's largest economy lost steam in the second quarter after a surprisingly strong start to the year.

On the supply side, Libyan officials said oil export terminals that have been shut since 2014 could open again soon, potentially restoring 600,000 barrels per day of crude export capacity.