US benchmark West Texas Intermediate for September fell 19 cents to $97.18 in mid-morning Asian trade, after declining 71 cents in New York.

Brent crude for September delivery was down 24 cents at $102.78. It fell $1.66 to finish at $103.02 in London on Tuesday, its lowest closing point since July 1, 2013.

Cutting its demand outlook for this year and next, the IEA on Wednesday said "the oil market today looks better supplied than expected".

The agency, the oil policy arm of the Organisation for Economic Cooperation and Development, projected 2014 oil demand would rise by 1.0 million barrels a day to 92.7 mbd, compared to its July forecast for growth of 1.2 mbd.

It cut its 2015 demand forecast to 94 million barrels a day -- 300,000 barrels less than the previous prediction.

"The sharp declines in oil prices is mainly due to the IEA report, with an unwinding of risk premiums associated with conflicts in Iraq and Ukraine," Ric Spooner, chief market analyst at CMC Markets in Sydney, told AFP.

"There is an understanding in the market now that there is a significant supply buffer in global markets in the case of a supply disruption," he said.

Oil prices have seen a build in risk premium in recent months due to armed insurgencies in crude producer Iraq as well as Ukraine, a key conduit for Russian energy exports to Europe.

Spooner said investors will next be scrutinising the latest US stockpiles report to be released later Wednesday for clues about demand in the world's top crude consumer.