Analysts expected a drop of 0.4 million barrels for this week.
The API reported a surge of 5.618 million barrels in the previous week.
Oil prices finished higher on Tuesday as market participants assessed the prospects for global oil demand.
The West Texas Intermediate for December delivery added 1.05 U.S. dollars, or 1.2 percent, to settle at 86.92 dollars a barrel on the New York Mercantile Exchange. Brent crude for January delivery increased 72 cents, or 0.8 percent, to close at 93.86 dollars a barrel on the London ICE Futures Exchange.
In its monthly oil market report released on Tuesday, the International Energy Agency noted an array of "headwinds" and a particularly tight diesel market.
The Paris-based energy watchdog raised its full-year oil demand growth estimate for 2022, but lowered its global oil demand growth estimate for 2023.
In its closely-watched monthly report released on Monday, the Organization of the Petroleum Exporting Countries lowered 2022 global oil demand growth and further trimmed next year's figure, citing economic challenges and geopolitical uncertainties.
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.
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