Oil prices hit their highest level since mid-2015 and then retreated after U.S. government data showed that the latest weekly draw in domestic crude stocks was not as big as an industry trade group had reported.
The U.S. Energy Information Administration (EIA) said U.S. crude stocks decreased by 2.4 million barrels during the week of Oct. 27.
That exceeded the 1.8 million barrel draw forecast by analysts in a Reuters poll but fell well short of the 5.1 million barrel decline reported late on Tuesday by the American Petroleum Institute.
"Oil prices fell since the release of the (EIA) report," said Carsten Fritsch, oil analyst at Commerzbank AG in Frankfurt, Germany, noting that the crude draw was "significantly less than the API numbers."
U.S. oil production also ticked up by 46,000 barrels a day to 9.55 million barrels a day, while weekly American crude oil exports rose to an all-time high of 2.13 million barrels per day.
Brent crude futures were down 45 cents at $60.49 per barrel at 2:29 p.m. ET (1829 GMT). U.S. West Texas Intermediate (WTI) crude ended Wednesday's session down 8 cents at $54.30 a barrel.
Before EIA reported the inventory data, Brent was trading at its highest since July 2015 on data showing OPEC had significantly improved compliance with its pledged supply cuts and Russia was widely expected to keep to the deal.
Brent's session high was $61.70, its highest since July 2015, and WTI rose as high as $55.22, putting it within a couple cents of its highest since July 2015.
Both Brent and U.S. crude notched strong monthly gains in October.
"The bulls have it and momentum is strong," Saxo Bank senior manager Ole Hansen said.
"We know how oil can easily run ahead of what is fundamentally justified and we've seen that in both directions in the last couple of years," he said. "We really need to see demand growth pick up even more strongly than what is currently expected for the bullish outlook for to be maintained."
This year, the Organization of the Petroleum Exporting Countries, Russia and other producers have cut 1.8 million barrels per day (bpd) in oil production to boost prices.
OPEC's October output fell by 80,000 bpd to 32.78 million bpd, a Reuters survey found, putting adherence to its pledged supply curbs at 92 percent, up from September's 86 percent.
Analysts and traders expect Russia to stick to its agreement to curb its oil output by 300,000 bpd from 11.247 million bpd reached in October 2016.
Saudi Arabia and Russia are considering extending the agreement to potentially cover all of next year.
Should participants after that return to full capacity and U.S. output also grow, a supply glut could return.
"We could rapidly ... go from a predicted deficit of around 260,000 barrels to a surplus of close to 1.5 million barrels. Prices would undoubtedly collapse," said Matt Stanley, a fuel broker at Freight Investor Services.
— CNBC's Tom DiChristopher contributed to this report.