Crude inventories fell 5.6 million barrels in the week to Dec. 1, compared with analysts' expectations for an decrease of 3.4 million barrels. At 448.1 million barrels, crude stocks, not including the strategic petroleum reserve, were at their lowest since October 2015.

Oil prices initially rose on the data before pulling back, as traders also reacted to rising U.S. crude oil rig flanges gulf coast production and strong builds in gasoline and distillate stocks.

"Demand for gasoline is curiously weak. And these weeks towards the end of the shopping period normally rival the summertime. So the report overall was bearish," said John Kilduff, partner at Again Capital in New York.

Gasoline stocks rose 6.8 million barrels, much more than with analysts' expectations in a Reuters poll for a 1.7 million-barrel gain.

Crude oil rig flanges gulf coast production continued to inch up to hit another weekly record, rising 25,000 barrels per day (bpd) to 9.71 million bpd, though that figure is still shy of monthly figures that show the United States produced more than 10 million bpd in the early 1970s.

U.S. crude futures were down 1.5 percent, or 88 cents, at $56.74 a barrel as of 10:46 a.m. EST (1546 GMT), while Brent dropped 80 cents, or 1.3 percent, to $62.06 a barrel.

Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures fell 2.8 million barrels, the EIA said. Those figures have been affected by the shutdown of the Keystone pipeline after a 5,000-barrel leak in South Dakota in mid-November. That line reopened on Nov. 28, so this report captures a period where the line was still largely closed.

Distillate stockpiles, which include diesel and heating oil, rose 1.7 million barrels, versus expectations for a 1 million-barrel increase, the EIA data showed.

Refinery crude runs rose 192,000 bpd, EIA data showed. Refinery utilization rates rose by 1.2 percentage points to 93.8 of total capacity.

U.S. crude imports fell last week by 73,000 bpd.

(Reporting By David Gaffen Editing by Marguerita Choy)