Updated from 2:23 p.m. EST

Crude oil prices closed sharply higher Wednesday after the release of inventory data and reports of a blast in Riyadh, Saudi Arabia.

The February futures contract added $1.87 to $43.64 in Nymex floor trading, after posting its first gain in six sessions Tuesday.

Weekly inventory data from the Energy Department showed a decline in the level of petroleum distillates -- which include heating oil -- in the most recent week. Supplies fell by 800,000 barrels. Adequate heating oil supplies are a major focus of the market at this time of year when seasonal demand is high. Crude oil inventories also fell.

A modest gain turned into a rally after media reports about a car bomb explosion in the Saudi capital, renewing concerns about terror attacks on the oil industry in the Persian Gulf.

Prices have slumped in the past week based on inventory levels and forecasts for warmer-than-normal weather following a holiday cold snap. With its recent 10% decline, the benchmark U.S. crude is near a three-month low.

The decline is just the latest leg in a steep correction that has knocked down prices some 25% from their record high of $55.17 in late October.