SAN FRANCISCO (MarketWatch) — U.S. oil prices fell to a two-year low on Wednesday, reversing course after a weekly supply report showed a higher-than-expected increase in supplies of the commodity.

Crude futures for December delivery CLZ24, +0.04% declined $1.97, or 2.4%, to settle at $80.52 a barrel on the New York Mercantile Exchange. That was oil’s lowest settlement since June 28, 2012.

December Brent futures UK:LCOZ4 fell $1.51, or 1.8%, to $84.71 a barrel on London’s ICE exchange. That settlement is Brent’s third lowest of the year.

Both benchmarks are about 25% lower from peak prices hit in June.

Earlier Wednesday, the U.S. Energy Information Administration said U.S. crude-oil supplies rose by 7.1 million barrels in the week ended Oct. 17. Analysts surveyed by Platts had expected an increase of 2.5 million barrels.

Crude futures had traded at $82.55 a little before the report was released.

The EIA also said gasoline inventories decreased 1.3 million barrels on the same week, and supplies of distillates rose 1 million barrels. The analysts polled by Platts had expected gasoline inventories to decline 1.7 million barrels, and distillates supplies to fall 1.5 million barrels.

Futures had caught a bit of a tailwind in recent sessions, and traded higher earlier Wednesday, on a better-than-expected outtook for China’s oil demand.

That, coupled with recent positive U.S. economic data, had eased concerns about demand, said Eugen Weinberg, head of commodity research at Commerzbank, in a note.

The analyst struck an optimistic tone. “As winter approaches in the northern hemisphere, we should see the usual seasonal increase in demand for oil,” he added.

A global oil glut and worries about slow demand have contributed to a sharp slide in oil since midyear.

Elsewhere in energy trading, November gasoline US:RBX4 declined 5.78 cents, or 2.6%, to settle at $2.1556 a gallon on Nymex.

Heating oil for November delivery US:HOX4 declined 3.98 cents, or 1.6%, to finish at $2.4734 a gallon on Nymex.

November natural gas US:NGX14 lost 5.20 cents, or 1.4%, to end at $3.6590 per million British thermal units on Nymex. That was natural gas’s lowest settlement since Nov. 19, 2013.

The EIA is expected to report on natural gas supplies on Thursday. Analysts surveyed by Platts expect the report to show an increase between 94 billion cubic feet and 98 bcf for the week.