The U.S. crude price fell sharply on Wednesday on demand concerns and news of limited capacity in the newly-expanded Seaway Pipeline.

Concerns about future oil demand weighed heavily on the market after the International Monetary Fund (IMF) on Wednesday cut its forecast for global economic growth in 2013 to 3.5 percent and warned of "considerable challenges ahead."

The 188-member IMF expected advanced economies to grow at a rate of 1.4 percent, 0.2 percentage points lower than its last projection made in October 2012. It also said that the return to recovery after a protracted contraction is delayed in the eurozone.

The fall of the U.S. crude price worsened as reports said that the Seaway Pipeline, which takes crude from Cushing, Oklahoma to the Gulf Coast, was constrained and could only work at about half of its 400,000-barrel-per-day capacity.

According to the reports, the Enterprise Products Partners reduced the amount of oil the Seaway Pipeline was delivering to Jones Creek in Texas because the delivery point had reached capacity.

That means the crude piled at Cushing, the delivery hub for U.S. oil futures, would increase, building up high inventories pressure and pushing down oil prices.

Investors were awaiting the Energy Department's weekly inventories report and remained cautious on Wednesday.

Light, sweet crude for March delivery slipped 1.45 dollars, or 1.51 percent, to settle at 95.23 dollars a barrel on the New York Mercantile Exchange. It was the first decline of over 1 percent since Dec. 21.

But Brent crude for March delivery edged up 38 cents, or 0.34 percent, to close at 112.80 dollars a barrel amid improving signs of Britain's employment situation.