NEW YORK (

TheStreet

) -- Just after the Energy Department reported a week of oil and product buildups, oil prices plunged and continued a morning loss trend.

Benchmark crude for delivery in November was slumping by more than $1 to under $71 per barrel on the New York Mercantile Exchange before the inventory announcement. Almost immediately afterward, the price was nose-diving by $2.50 at $69.26.

According to the Energy Department's Energy Information Administration, already high oil stocks swelled by 2.8 million barrels last week to 335.6 million barrels. Analysts polled by Platts were instead expecting a 2.25 million barrel fall.

Even more telling, gasoline inventories soared by 5.4 million barrels, while distillate fuels grew another 3 million barrels. Propane and propylene inventories also trekked higher by 1.3 million barrels.

This came on the heels of Tuesday's announcement from the American Petroleum Institute, an industry trade group, which said oil inventories grew by a much slimmer 276,000 barrels. They also reported a 3.8 million barrel gasoline stockpile build and a 1.9 million barrel fall in distillates.

Next up for oil watchers is a 2:15 p.m. announcement from the Federal Open Market Committee today. With oil watchers eyeing dollar swings, the meeting of the Fed's policy-making arm is expected to maintain its key interest rate at near zero, but its statement will be parsed apart for any other economic recovery clues.

Meanwhile, shares of the oil majors were moving in the red on Wednesday morning after finishing Tuesday in positive territory.

Exxon Mobil

(XOM) - Get Report

,

Chevron

(CVX) - Get Report

and

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ConocoPhillips

(COP) - Get Report

were losing 0.8%, 1.1% and 1.5%, respectively.

American depositary shares for

BP

(BP) - Get Report

and

Royal Dutch Shell

(RDS.A)

were doing no better, sliding 1.5% and 1.4% each.

-- Written by Sung Moss in New York

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