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Oil Prices Down on Data

The release of bearish U.S. inventory data sparks a selloff.
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Updated from 10:36 a.m. EST

Crude oil prices fell sharply Wednesday after a big rally Tuesday as traders reacted to the release of closely watched U.S. inventory data.

The February futures contract lost 51 cents to $43.40 in Nymex floor trading.

The Department of Energy reported that U.S. inventories of distillates, which include heating oil, fell much more than expected in the last week after a decline the week before. Crude oil inventories fell sharply, and that helped cushion the selloff.

The supply-and-demand equation for heating oil is a major market focus at this time of year, with weather forecasts for North America and Europe playing a key role.

The recent wave of unseasonably warm weather in the northern U.S. had been a drag on prices until yesterday, when Saudi Arabia said it had executed its share of production cuts agreed by OPEC members and scheduled to have taken effect Jan. 1.