Benchmark crude for August delivery was down 47 cents to $77.38 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract gained 76 cents to settle at $77.85 on Tuesday.
Crude inventories increased last week by 3.7 million barrels, the American Petroleum Institute said late Tuesday. Analysts had expected a fall of 1.5 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
Inventories of gasoline and distillates also rose, the API said.
The Energy Department's Energy Information Administration is scheduled to announce its supply report later Wednesday.
"The bears must be satisfied," energy consultancy The Schork Group said in a report. "All told, it was a bearish report." Crude has hovered above $77 a barrel this week as traders ponder whether global oil demand is strong enough to justify extending a rally from $64 on May 25. US oil supplies had fallen in recent weeks before last week's gain.
In other Nymex trading, heating oil fell 0.34 cent to $2.1095 a gallon, gasoline dropped 0.47 cent to $2.1288 a gallon and natural gas gained 0.7 cent to $4.763 per 1,000 cubic feet.
Brent crude was down 44 cents at $77.60 on the ICE futures exchange.
