Analysts expected a surge of 1.551 million barrels for this week.
The API reported a hike of 7.054 million barrels in the previous week.
Oil prices fell on Tuesday, driven by expectations of more U.S. supply following reports that the U.S. government would continue releasing crude oil from reserves.
The West Texas Intermediate for November delivery decreased 2.64 U.S. dollars, or 3.1 percent, to settle at 82.82 dollars a barrel on the New York Mercantile Exchange. Brent crude for December delivery lost 1.59 dollars, or 1.7 percent, to close at 90.03 dollars a barrel on the London ICE Futures Exchange.
Bloomberg reported that the U.S. Joe Biden administration is moving toward a release of at least another 10 million to 15 million barrels of oil from the nation's emergency stockpile in a bid to keep gasoline prices from climbing further, citing people familiar with the matter.
Also weighing on the prices were worries that a slowing global economy would hurt energy demand.
The API figure shows how much oil and product is available in storage, giving an overview of U.S. petroleum demand. If the increase in crude inventories is more than expected, it implies weaker demand and is bearish for crude prices.