Meanwhile in Washington, top executives of big oil companies defended surging profits at a time of high prices in front of US lawmakers, warning that a windfall profit tax could stymie investment and lead prices still higher.
US crude futures on the New York Mercantile Exchange fell 76 cents to $58.95 a barrel, while London Brent fell $1.03 to $56.79 a barrel.
Crude supplies in the world's largest energy consumer rose by 4.5 million barrels last week, bringing inventories nearly 13 percent above last year, the US Energy Information Administration said in a weekly report Wednesday.
The build countered concerns over a 1.5 million barrel decline in the nation's heating oil supplies in the same period, which defied expectations from analysts anticipating a build due to unusually warm weather in the Northeast.
US oil prices are about 15 percent below the peak near $71 a barrel hit in late August after the first of a procession of damaging hurricanes to strike the Gulf of Mexico, as global demand growth showed signs of a big slowdown under the weight of record energy costs.
But prices remain high enough to draw the ire of consumers and politicians.
US senators on Wednesday fired questions on topics ranging from refinery expansions to oil price-setting policy at five executives from Exxon Mobil Corp, Chevron Corp, ConocoPhillips and the US units of BP Plc and Royal Dutch Shell Plc.
It was unclear whether the hearing would lead to new laws, or simply allow lawmakers to express outrage at high prices to companies that posted combined quarterly profits of $30 billion.
Lee Raymond, the chief executive who is about to retire from Exxon Mobil, told the Senate's commerce and energy committees that proposals for a windfall profit tax could slow investment in domestic oil production.
Adding pressure Wednesday, US oil production from the Gulf of Mexico, home to about a quarter of domestic oil supply, continued to recover from hurricane damage, with the output rate rising over 50 percent of the normal 1.5 million bpd.
The EIA said this week the complete recovery of hurricane-hit US crude oil and natural gas production and pipeline facilities in the Gulf region will take until the middle of 2006, about three months longer than previously estimated.
Onshore, only three refineries remained off-line on the Gulf Coast following the storm, representing less that 5 percent of US refining capacity.
Top oil exporter Saudi Arabia may fall behind its schedule to raise output capacity by 1.5 million barrels per day (bpd) by 2009 due to shortages of oil rigs and equipment, a former top official at Saudi Aramco told Reuters.
Sadad Husseini, a key architect of Saudi energy production policy for more than a decade, said the kingdom has the oil in the ground, political will and cash to ramp up output.
But a shortage of equipment could leave state oil firm Aramco two-to-three years behind its plan to lift capacity to 12.5 million from 11 million bpd now.