Brent crude settled up 8 cents at $99.57 a barrel, while U.S. West Texas Intermediate crude gained 46 cents to $96.30 a barrel.

Global benchmark Brent is down sharply since hitting $139 in March, which was close to the all-time high in 2008, as investors have been selling oil of late on worries that aggressive rate hikes to stem inflation will slow economic growth and hit oil demand.

Prices fell by more than 7% on Tuesday in volatile trade to settle below $100 for the first time since April, and are in an oversold condition based on the relative strength indicator, a measure of market sentiment.

"I wouldn’t say this uptrend is over yet," said Thomas Saal, senior vice president at StoneX Financial. "Inventory levels are still pretty low worldwide, and that’s been a big factor in this rally."

The physical market remains tight. Key benchmarks, such as Forties crude and U.S. Midland crude, are trading at premiums to the futures market, painting a different picture than what is happening in futures, which have been affected by inflation data that augurs for more rate hikes from big central banks.

Forties crude, one of the grades underpinning Brent futures, was bid at a record high premium to the benchmark of plus $5.35 a barrel on Wednesday. U.S. Midland crude was at a premium of $1.50 a barrel to WTI, also reflecting tightness, though below premiums reached in late February after Ukraine was invaded.

U.S. oil inventories rose more than expected in a mild respite from the tightness in markets. U.S. commercial crude stocks rose by 3.3 million barrels, government data showed, versus expectations for a modest draw in stocks.

U.S. consumer prices accelerated to 9.1% in June as gasoline and food costs remained elevated, cementing the case for the Federal Reserve to hike interest rates by 75 basis points later this month.

Expectations for lower growth have also sparked a flight to the U.S. dollar for safety reasons. The dollar index hit a 20-year-high on Wednesday, which makes oil purchases more expensive for non-U.S. buyers.

Renewed COVID-19 curbs in China have also weighed on the market, as Chinese imports of crude dropped to their lowest in four years in June. [nL1N2YU0DH]

"Demand issues are catching up to high prices. The U.S. dollar is causing downside pressure on all commodities. There’s been a shift in mentality over the last couple of weeks," said Tony Headrick, energy markets analyst at CHS Hedging.

This week, both the Organization of the Petroleum Exporting Countries and International Energy Agency, in monthly reports, warned that demand was weakening, particularly in the largest world economies.