Oil fell below $33 a barrel on Wednesday after Saudi Arabia ruled out production cuts and an industry report said that US crude stockpiles had hit record levels, underlining the supply glut.

Saudi Oil Minister Ali al-Naimi said production cuts would not happen, though more countries would join a deal to freeze output. OPEC and non-OPEC producers who support the idea are planning a mid-March meeting, his Venezuelan counterpart said.

"Al-Naimi's remarks punctured an oil-price rally that has lacked substance," said David Hufton of broker PVM. "The market correctly interpreted the presentation as bearish."

Brent crude was down 75 cents at $32.52 a barrel at 1428 GMT. US crude fell $1.16 to $30.71. Both dropped more than 5 percent in intra-day trading on Tuesday.

Also pressuring prices, the American Petroleum Institute (API), an industry group, said on Tuesday that crude inventories rose by 7.1 million barrels last week, far exceeding expectations of a 3.4 million barrel rise.

The US government's Energy Information Administration, which said last week that crude stocks hit a record high, releases its supply report at 1530 GMT.

Oil has slid from more than $100 a barrel in mid-2014, pressured by excess supply and a decision by the Organization of the Petroleum Exporting Countries to abandon its traditional role of cutting production to boost prices.

OPEC and outside producers have stepped up diplomatic activity after prices slumped to their lowest since 2003 last month, with Saudi Arabia, Qatar, Venezuela and non-OPEC producer Russia saying on Feb. 16 that they would freeze output.

One stumbling block in attempts to forge a wider agreement is Iran, which is increasing output after the lifting of Western sanctions in January and whose oil minister was quoted on Tuesday as calling the deal "laughable".

And merely not adding more barrels to the market may have little impact on the excess supply, given that OPEC production is running at its highest in many years and increased further in January.

"At these levels, even if OPEC members honestly implement a production freeze, it will do little to improve balances in the coming months," Energy Aspects analysts said in a report.