U.S. crude futures dropped 1.5 percent on Wednesday in heavy trading after a key oil pipeline cut throughput, raising concerns inventories at the Midwest delivery point for the contract might swell further.

As prices for international Brent crude held in positive territory following supportive economic data, U.S. crude plunged in afternoon trade after shippers received notification that the newly expanded 400,000 barrel per day (bpd) Seaway pipeline had cut rates to 175,000 bpd. It was not immediately clear when full rates would be restored.

The line, which was restarted earlier this month after the expansion was completed, ships crude from the Cushing, Oklahoma delivery point for the New York Mercantile Exchange's oil contract to the U.S. Gulf Coast. The reduced throughput was expected to increase inventories at the hub, which had already hit record levels earlier in the month.

Brent's premium to U.S. West Texas Intermediate crude widened to near $17.50 a barrel - the highest level since Jan. 15 - following the news. The spread had dipped below $15 a barrel last week following Seaway's start-up.

"Stocks at Cushing are already at record levels and traders were betting that this line would help them draw, and narrow, the Brent-WTI spread," said Andy Lebow, vice president at Jefferies Bache in New York.

"This could be very bearish WTI," he added.

Front-month U.S. crude oil futures settled down $1.45 to $95.23 a barrel, snapping four straight sessions of gains which had pushed the contract above a reading of 70 on the 14-day relative strength index, a level typically seen as an indication a commodity has been overbought.

Trading volumes were strong, with U.S. crude trade at nearly double the levels seen over the previous 30 days. Brent crude volumes were up 60 percent over that level.

Brent crude oil prices traded up 38 cents to settle at $112.80 a barrel.

Brent found early support from data showing British unemployment fell for the 10th consecutive quarter at the end of last year and that jobless claims hit their lowest level since mid-2011 in December.

Investors were also awaiting weekly inventory data from the American Petroleum Institute and the U.S. Energy Information Administration, delayed one day by the U.S. holiday on Monday, which was expected to show builds in crude and refined product inventories last week.

The American Petroleum Institute's (API) report is due at 4:30 p.m. EST (2130 GMT) on Wednesday and the U.S. Energy Information Administration's report follows at 11 a.m. EST on Thursday. (Reporting by Matthew Robinson, Robert Gibbons and Gabriel Debenedetti in New York, Ron Bousso and Simon Falush in London and Florence Tan and Seng Li Peng in Singapore; editing by Peter Galloway, Gunna Dickson, G Crosse)