In the previous session, Brent and U.S. crude futures rose by up to 1 percent after the Energy Information Administration (EIA) said crude inventories dropped 2.3 million barrels last week, versus forecasts for a 2.1 million-barrel decline. It was the ninth straight weekly draw.

Still, U.S. crude inventories are at a historically high 519.5 million barrels for this time of year, the EIA said. Also, total U.S. crude and oil product stocks rose 2.62 million barrels to an all-time high of 2.08 billion barrels as gasoline stocks posted a surprise build of 911,000 barrels during summer driving season.

Adding to that, market intelligence firm Genscape reported a build of 725,176 barrels for the week to July 19 at the Cushing, Oklahoma delivery point for U.S. crude futures, traders said.

"The market is technically weak, inventories are still high for summer, maintenance season is not far off and we have floating barrels at sea to top it all," said Pete Donovan, broker at Liquidity Energy in New York.

Brent crude closed 97 cents, or 2.1 percent, lower at $46.20 a barrel.

U.S. West Texas Intermediate (WTI) crude settled down $1, or 2.2 percent, at $44.75.

ABN AMRO senior energy economist Hans van Cleef said Brent could slip toward the $42-$43 level. "Near-term, there are still some downside risks."

Phil Davis, trader at PSW Investments in California, pointed to the 4.2 million-barrel build of "other oils" cited by the EIA, which eclipsed the gasoline build.

Those other oils include special gas for smaller airplanes and less-known industrial oils, which refiners typically crank out when there was too much gasoline and distillate supply, Davis said.

"These other oils don't get as much attention as the headline numbers put out by the EIA and have been a clever and convenient way to hide weak product demand," he said.

Lending some fundamental support to crude, exports of Nigeria's largest crude oil stream, Qua Iboe, will remain under force majeure for at least one month as operator Exxon Mobil Corp fixes a pipeline, sources said.