Updated from 12:37 p.m. EST

Crude oil prices closed sharply higher Wednesday on somewhat bullish inventory data

The January futures contract added $2.37 to $44.19 in Nymex floor trading, having gained ground in the previous two sessions amid a deep two-month price correction. Just two sessions ago, prices were close to falling through $40.

Energy Department data today showed a decline in crude oil stocks. Distillate inventories -- which include heating oil -- were flat, versus forecasts for an increase. Unusually cold weather is also supporting prices.

Despite this week's bounce, prices are still down about 20% since hitting a record closing high of $55.17 on Oct. 26. The market's correction comes amid a resurgence in U.S. production following widespread disruption to Gulf of Mexico operations from Hurricane Ivan in September.

Traders were also following the latest twist in the saga of Russian oil company Yukos. In an unusual move late Tuesday, the company filed for U.S. bankruptcy protection ahead of the Russian government's planned auction of the company's Siberian production unit on Dec. 19. Yukos and Moscow have been embroiled in a months-long dispute over back taxes, which has roiled the oil markets from time to time.

The company said it is seeking a restraining order to halt the intended auction, which would dramatically reduce the company's fortunes and cause "immediate and irreparable harm."