Crude oil prices moved sharply lower in Wednesday trading after Saudi Arabia's oil minister said there was no chance for a production cut.

Saudi Arabia recently joined some members of the Organization of Petroleum Exporting Countries and Russia in backing a move to freeze production at January levels provided other oil-rich countries follow suit. That led to a short-term rally in crude oil prices as markets expected a shift away from the supply side.

Saudi Oil Minister Ali al-Naimi told a packed house at an investment conference in Houston that a production freeze is just the start of a process meant to cut into higher crude oil inventories held in storage. On the prospects of a production cut, the minister was quoted by The Dallas Morning News as saying it "will not happen."

Oil prices held steady at the open Tuesday before the minister's speech in Houston and ended the day sharply lower. That momentum continued into Wednesday, with Brent falling 2 percent at the start of trading in New York to $32.60 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, was down about 3.5 percent to start the day at $30.77 per barrel, testing the psychological threshold of $30 per barrel.

The minister suggested that, instead of production cuts, the market would force momentum in crude oil prices. Markets nevertheless continue to show supply strains as companies struggling in the current market focus their investments in the most productive basins.

The American Petroleum Institute published data after markets closed Tuesday showing U.S. crude oil inventories increased by 7.1 million barrels for the week ending Feb. 19. Some refineries in the United States are scaling back on processing some petroleum products in an effort to stimulate retail gasoline prices.