Oil prices fell anew after briefly spiking on Wednesday after government data showed gasoline and distillate inventories fell more than expected, offsetting a surprise rise in U.S. crude stocks as imports increased.
Brent futures fell 25 cents to $63.44 a barrel at 2:33 p.m. ET, after briefly rising to $64.64, near the highest level since June 2015.
U.S. West Texas Intermediate (WTI) futures settled 39 cents lower, or 0.68 percent, at $56.81 a barrel, after spiking to $57.92, the highest level since July 2015.
Crude inventories rose by 2.2 million barrels in the last week, compared with analysts' expectations for an decrease of 2.9 million barrels.
Preliminary U.S. production figures also showed weekly output rose to an all-time high of 9.62 million barrels a day, taking out the previous record set in June 2015.
Offsetting the crude build, gasoline stocks fell by 3.3 million barrels, compared with analysts' expectations in a Reuters poll for a 1.9 million-barrel drop. Distillate stockpiles, which include diesel and heating oil, were down by 3.4 million barrels, versus expectations for a 1.4 million-barrel decline, the EIA data showed.
U.S. gasoline inventories fell to 209.5 million barrels last week, the lowest weekly level since November 2014, according to U.S. Energy Information Administration data on Wednesday.
Futures slipped earlier as Chinese crude imports fell to a one-year low, but losses were offset by investor caution over rising political tensions in the Middle East.
China's October oil imports fell to just 7.3 million barrels per day from a near record-high of about 9 million bpd in September, according to data from the General Administration of Customs on Wednesday. That is the lowest level since October 2016, though imports were up 7.8 percent from a year ago.
Li Yan, oil analyst with Zibo Longzhong Information Group, said the lower imports reflected fewer purchases from independent refineries, "as many of them are running out of crude quotas for this year."
For next year, however, independent refiners are likely to boost their imports again as authorities on Wednesday raised the 2018 crude oil import quota by 55 percent over 2017 to 2.85 million bpd.
Traders said they were closely watching escalating tensions in the Middle East, especially between regional rivals Saudi Arabia and Iran.
Brent crude hit $64.65 earlier this week, its highest since mid-2015, as political tensions in the Middle East escalated after a sweeping anti-corruption purge in top crude exporter Saudi Arabia.
The oil price has gained around 14 percent in the last month alone, propelled largely by evidence that OPEC's efforts, together with those of its partners to curtail output, is helping erode a global overhang of unused crude.
"Stronger oil fundamentals and investor inflows have been the catalyst for higher oil prices, but adding further support now is a focus on several geopolitical risks that have been looming over oil markets for a while," said analysts at Citi.
The resignation on Saturday of the Saudi-allied Lebanese prime minister Saad al-Hariri, announced from Riyadh and blamed on Iran and Hezbollah, is seen by many as the first step in an unprecedented Saudi intervention in Lebanese politics.
Saudi air defense forces intercepted a ballistic missile fired towards Riyadh on Sunday. Saudi Arabia accuses arch-foe Iran of supplying missiles and other weapons to Houthi militia in Yemen. Iran denies the charges and blames the war in Yemen on Riyadh.
The Organization of the Petroleum Exporting Countries' 2017 World Oil Outlook showed the group predicts demand for its crude will rise more slowly than previously expected in the next two years, as higher prices from its supply policy stimulate output growth from rival producers.
— CNBC's Tom DiChristopher contributed to this report.