US crude inventories last week dropped 5.1 million barrels, more than anticipated, and production hit another record high at 9.78 million barrels per day (bpd), government data showed.

The US peak, when records were only kept on a monthly basis, is 10.04 million bpd, set in November 1970.

Gasoline stocks jumped 5.7 million barrels, more than double analysts' expectations for a 2.5 million-barrel gain.

"It's kind of a mixed bag across the board - a little bigger than expected draw on crude but gasoline demand was down slightly. Usually in this time of year you see a little bit more demand," said Tariq Zahir, managing member at Tyche Capital Advisors.

US West Texas Intermediate crude settled down 54 cents at $56.60 a barrel, a 1 percent decline. Brent crude ended down 1.4 percent, or 90 cents, at $62.44 a barrel.

The international benchmark lost 2.1 percent on Tuesday on a wave of profit-taking after an unplanned shutdown of the Forties North Sea pipeline early this week helped send the global benchmark above $65 for the first time since mid-2015.

While the Forties shutdown has provided a price floor, early gains quickly evaporated in a global market that is still oversupplied and with output rising in the United States.

The US Energy Information Administration on Tuesday forecast that domestic crude oil output will rise by 780,000 bpd to a record high of 10.02 million bpd in 2018.

"The fact that the market sold off so much after the Forties outage shows that the market struggles to trend higher. Now, we're basically where we were a month ago," Olivier Jakob of Petromatrix consultancy said.

US crude contracts that expire later next year experienced a more dramatic selloff than front-month January, pushing the curve further into "backwardation," which encourages producers to drain inventories because it is more attractive to sell to get the higher price for the prompt contract.

Brent has been underpinned by expectations for an extended shutdown of Britain's biggest pipeline from its North Sea oil and gas fields for repairs after a crack was found. Forties is the largest of the five crude oil streams that underpin the dated Brent benchmark.

The operator of the pipeline, which carries about 450,000 bpd of Forties crude, roughly a quarter of the North Sea's total output, said it was still considering repair options and reiterated that any repairs would take several weeks.

A number of producers, including BP and Royal Dutch Shell, said they had closed down oil fields in response.