After rising over 15 percent over the four sessions since the Nov. 30 OPEC meeting, Brent futures fell $1.06, or 1.9 percent, to $53.88 a barrel by 1:26 p.m. EST. U.S. West Texas Intermediate crude futures fell $1.05, or 2 percent, to $50.74 per barrel.

The Brent front-month contract has outperformed the U.S. contract since the OPEC meeting, with its premium over WTI reaching $2.29 a barrel earlier on Tuesday, its widest since August.

"Reaction to the OPEC news was overdone. All they did was agree to cut output that they had added recently," said Phil Davis, managing partner at venture capital firm PSW Investments in Woodland Park, New Jersey.

OPEC's output set another record high in November, rising to 34.19 million barrels per day (bpd) from 33.82 million bpd in October, according to a Reuters survey.

As part of last week's decision, OPEC said major oil producers outside the group would cut 600,000 bpd of production on top of OPEC's 1.2 million bpd reduction. Those countries and OPEC meet this weekend to finalize the terms.

Russia reported average oil production in November of 11.21 million bpd, its highest in nearly 30 years. That means OPEC and Russia alone produced enough to cover almost half of global oil demand, which is just above 95 million bpd.

Market watchers had said OPEC's decision to cut output marked an about-face for Saudi Arabia, which has been battling to keep market share for the past two years by selling more, if cheaper, barrels rather than bolstering prices.

But in a sign the fight for market share is not over, Saudi Aramco cut the January price for its Arab Light grade for Asian customers by $1.20 a barrel from December.

Meanwhile, Glencore chief Ivan Glasenberg reflected some fears in the market when he said prices could drop to $35 should U.S. shale producers ramp up their output though he hoped they would be "responsible."

The U.S. Energy Information Administration (EIA) expects U.S. crude production to fall less than previously expected to 8.9 million bpd in 2016 and to 8.8 million bpd in 2017 from 9.4 million bpd in 2015, according to its monthly short term energy outlook.

Analysts, meanwhile, forecast U.S. crude inventories fell by 1 million barrels last week.

The American Petroleum Institute (API) is set to release U.S. inventory data at 4:30 p.m. EST on Tuesday, while the U.S. EIA will release its petroleum report at 10:30 a.m. EST on Wednesday.