"It's an eye-popping number, but I have no idea what to make of it," said Michael Wittner, global head of oil research at Societe Generale. "If you do the arithmetic, imports are up a million barrels a day so that's half of it. ... I'm not sure what to make of it. We'll get the real numbers [Wednesday]."

Some analysts say crude could test $50 per barrel, if the Energy Information Administration data at 10:30 a.m. shows a build anywhere near the 14.2 million barrels reported Tuesday afternoon by API. West Texas Intermediate crude futures for March settled down 1.6 percent at $52.17 per barrel Tuesday. After the API report, WTI futures fell further to $51.70 per barrel, dipping below its 50-day moving average just above $52.

Oil prices were down about 3 percent as of Tuesday's NYMEX settle, amid concerns about oversupply, as U.S. shale drillers restore more rigs to production. A bearish Reuters report putting Chinese demand growth at the slowest pace in at least three years also weighed on sentiment Tuesday.

Stocks were held back by the weakness in oil prices Tuesday. A 100-point rally in the Dow fizzled as crude prices slid, and the Dow closed up just 37 points. Stock futures were mixed in early trading Wednesday, and oil was slightly lower.

The U.S. government reports weekly oil inventory data at 10:30 a.m. ET, and if that report confirms American Petroleum Institute data showing a shockingly large supply build, already falling oil prices are likely to continue to drop.

Signs that U.S. shale producers are raising output are competing with the fact that OPEC and other producers have complied with a deal to cutback production, and that has held the market in a range. At the same time, there has been a record number of speculators with long positions in the futures market, and analysts said that could at some point become a negative for prices as the crowded trade unwinds.

"Bottom line is: Bullish OPEC cuts versus bearish U.S. shale recovery," said Wittner. "The OPEC cuts look like they'll be around a million barrels a day. The U.S. recovery is not a million barrels a day. It's 200,000, 300,000 and maybe 500,000 by the fourth quarter versus last year."

The oil market is heading into an already bearish time of year for oil prices. It's when refineries are undergoing maintenance for the switch over to summer formulas. Refiners use less crude oil and demand for gasoline is also in a winter lull, but demand has already been falling off, and gasoline supplies are also growing. U.S. gasoline supplies are at 257 million barrels, just 1.7 million barrels below the all-time high set last February.

"Oil is under tremendous pressure now. It's below the major moving averages and we're going into the shoulder demand season," said John Kilduff of Again Capital. If the EIA data confirms the build, "oil's got big problems," he said, adding he expects crude could fall through $50.

According to Platts, analysts expected weekly crude supplies to grow by 2.5 million barrels; gasoline by 1.2 million barrels and distillates by 1.1 million barrels.

"For the time being, I think the floor is $50, but if we don't see the OPEC cuts translate into stock draws, and we don't get stock draws at the same time we're getting seasonally weak crude and product demand, we could see some downward pressure," said Wittner.

Wittner said the comeback in U.S. shale production has surprised the market, and analysts are ramping up expectations for U.S. production. The EIA Tuesday said it now expects U.S. oil production to average 9 million barrels a day this year and 9.5 million barrels a day next year.

Citigroup energy analyst Eric Lee said he expects U.S. production to reach 9.5 million barrels a day by the end of this year.

Lee also expects the $50 price to hold for now, with WTI trading in a range of $50 to $55 per barrel. The first quarter is expected to be the weakest of the year, and he said WTI futures could be in the low $60s by the end of the year.

Lee said the speculative position in crude futures could add downward pressure. "Given there are so many positions in it, looks like a crowded trade and some of it could be given back in the short term," he said.

Besides the oil number, markets will be watching the $23 billion 10-year Treasury auction at 1 p.m. and whatever comes out of Washington. Treasury yields were mostly lower Tuesday and the 10-year dipped to 2.39 percent in late trading.

Earnings expected Wednesday include Allergan, Sanofi, Time Warner, GlaxoSmithKline, Goodyear Tire, Carlyle Group, Owens Corning and Humana. Whole Foods reports after the bell, as does Prudential Financial, Suncor, Fiserv, Rayonier and Pilgrim's Pride.

The Dow finished up just 37 points at 20,090 Tuesday, after setting a new intraday high. The closed up less than a point at 2,293, weighed down by a 1.4 percent decline in the energy sector. But Nasdaq closed at a record high of 5,674, up 10.