Oil prices dropped Wednesday as a government report showed that US crude inventories increased to record high.

US crude inventories rose 3.5 million barrels to 397.7 million barrels for the week ended April 11, according to Energy Information Administration (EIA) report, reaching the highest level in 83 years.

Analysts believed it is a result of renaissance of the US oil production industry. US crude inventories are getting close to 400 million barrels, which is very bearish for the crude prices.

The decline, however, was buffered on concerns that the standoff over Ukraine between the West and Russia may disrupt Russian oil export.

Russia has vowed to defend its citizens in neighboring Ukraine after the Ukraine government resumed operations to oust pro-Moscow militants from eastern cities.

On the US economic front, sales of new single-family houses in the United States slumped 14.5 percent to a seasonally adjusted annual rate of 384,000 in March, the lowest level in eight months, said the Commerce Department Wednesday. The fresh figure was far below analysts'expectations.

Light, sweet crude for June delivery moved down 31 cents to settle at 101.44 dollars a barrel on the New York Mercantile Exchange, while Brent crude for June delivery lost 16 cents to close at 109.11 dollars a barrel.