Oil prices dipped on Wednesday as markets awaited data on US crude inventory levels for clues on the state of demand in the world's biggest economy.

US benchmark West Texas Intermediate for delivery in June fell 32 cents to $56.74 a barrel compared with Tuesday's close.

Brent North Sea crude for June delivery eased two cents to stand at $64.62  in London afternoon deals.

The US Department of Energy (DoE) will release its weekly stockpiles report later Wednesday.

Crude reserves are expected to have increased by 2.9 million barrels in the week to April 24, according to a Bloomberg News survey of analysts.

"The market is broadly waiting on the US inventories numbers as the weekly report has been a key driver to changes in crude prices," Ric Spooner, chief market analyst with CMC Markets in Sydney, told AFP.

Inventories have been expanding for the past 15 weeks and are currently at the highest level on record, contributing to a global glut that has been the main factor for a price collapse of almost 60 percent between June and February.

Spooner said investors will be closely watching the state of US crude production, which is also included in the DoE's weekly report.

US output has dipped slightly in three of the past four weeks, but still hovers around nine million barrels a day.

Dealers are hoping a slowdown in US production from shale rock could alleviate the global oversupply.

"If the production numbers continue to slip or plateau, the market will be more optimistic over the coming days," Spooner said.