U.S. crude futures ended Wednesday trading 1.21 percent lower after a government report showing an eighth straight weekly drop in U.S. crude stockpiles was offset by a large build in oil products, which have dominated market action lately.
A firm dollar also weighed on oil, while uncertainties about progress in the Greek debt and Iran nuclear crises led to further caution among investors and traders.
"It could ultimately turn out be a choppy day from the push-and-pull between crude and products," said Tariq Zahir, an oil bear at Tyche Capital Advisors in Laurel Hollow in New York.
"The focus will likely turn to Greece and the Iran nuclear deadline in an attempt to break out of the trading range we've been in over the past two weeks," he added.
Brent crude futures were down 96 cents, or 1.49 percent, at $63.50 a barrel by 2:35 p.m. EDT. Brent has been trapped in the $62-$65 range over the past two weeks.
The selloff came after the U.S. Energy Information Administration said gasoline stockpiles rose by 680,000 barrels last week, versus a drop of 304,000 barrels forecast by analysts in a Reuters poll.
Inventories of distillates, which include diesel and heating oil, rose by 1.8 million, more than the forecast build of 1.0 million.
U.S. East Coast refinery use, meanwhile, reached its highest level in 5 years. The region includes the New York Harbor, the delivery point for U.S. oil products contracts.
The bearish data offset the positive impact the market initially experienced from a larger-than-expected draw of 4.9 million barrels in crude stocks.
The dollar rose slightly on prospects for higher U.S. interest rates, adding to the pressure on crude prices, before edging lower.
In Greece, international creditors demanded sweeping changes to Prime Minister Alexis Tsipras' tax and reform proposals, adding fresh uncertainty to talks aimed at averting a debt default.
In Iran, potential roadblocks remained for a nuclear accord that held the key to unlocking Western sanctions on Tehran oil exports. Iran's supreme leader on Tuesday ruled out freezing sensitive nuclear work for a long time while Tehran's parliament banned access for U.N. inspectors to its military sites and scientists, potentially thwarting a June 30 deadline for the accord.