U.S. oil rose as high as $96.24 a barrel before retreating to $93.68, down 85 cents, by 11:00 a.m. EDT. Brent crude also struck a record $91.71 before dropping to $90.09, down 54 cents.
Oil soared about 5 percent on Wednesday after U.S. refiners drained 3.9 million barrels of crude from storage, mostly from tanks in Cushing, Oklahoma - delivery point for the NYMEX oil futures contract.
The surprise decline came at a time when the world's thirst for oil is climbing towards its seasonal fourth-quarter peak as winter arrives in the northern hemisphere.
OPEC, supplier of more than a third of the world's oil, is blaming speculators, political tensions and a weak dollar for driving up the cost of fuel and have resisted consumer calls for more oil. In a gesture to consumers worried about the economic impact of record prices, OPEC supply increase of 500,000 bpd, effective today. Analysts have called the move too little, too late.
According to top executives from oil majors Exxon Mobil and Royal Dutch Shell the market is not short of oil. Weakness in the U.S. currency has boosted many dollar-denominated commodities and helped fuel oil's rally. Also, rate cuts by the Fed have added liquidity to financial markets by making it cheaper to borrow.