Workers on the stairs of an oil storage tank at the Musket Corp. Windsor Crude Terminal in Windsor, Colorado.

Oil prices traded lower on Thursday as a rising dollar and climbing interest rates knocked off the commodity from its highest levels in more than three years.

U.S. West Texas Intermediate crude futures topped out at $69.56 a barrel, the highest level since Nov. 28, 2014, when WTI hit $73.56. The contract settled down 18 cents, or 0.3 percent, at $68.29.

International benchmark rose 30 cents, or 0.4 percent, to $73.79 by 2:33 p.m. ET. It earlier rose to $74.74, its best intraday price since Nov. 27, when Brent peaked at $77.46.

The dollar index, which tracks the dollar's performance against six other currencies, rose 0.2 percent to 89.82, while the benchmark 10-year Treasury yield broke above 2.9 percent.

Earlier on Thursday, crude futures were extending gains from the previous session, which came after the Energy Information Administration reported U.S. crude stockpiles fell by 1.1 million barrels last week.

The weekly figures also showed gasoline demand rose to 9.86 million barrels a day ahead of the summer driving season.

The "EIA inventories we got yesterday were Bullish across the board as the EIA showed record gasoline products supplied," Roberto Friedlander, head of energy trading at Seaport Global Securities, said in a research note.

The EIA report provided additional support in an already bullish environment, as tensions escalate among world powers involved in Syria's civil war and rocket attacks by Yemeni rebels target top oil exporter Saudi Arabia.

"What we're seeing is the re-emergence of a geopolitical risk premium — which was absent for the past few years — as the underlying market has gotten tighter," said Tamar Essner, director of energy and utilities at Nasdaq Corporate Solutions.