Updated from 10:34 a.m. EST
Crude oil prices closed slightly lower Thursday, after a big jump Wednesday, as traders focused on weather forecasts calling for unseasonably warm weather in North America and Europe.
The February futures contract of the benchmark U.S. crude was fell 19 cents to $43.45 in Nymex floor trading, following a near-5% spike Wednesday driven by the release of somewhat bullish inventory data and two blasts in Riyadh, Saudi Arabia. The market is closed Friday for the New Year's holiday.
Weather forecasts play a major role in the markets at this time of year as traders try to gauge the supply-and-demand dynamic for heating oil, a petroleum distillate, during its peak period.
Indeed, weekly inventory data from the Energy Department yesterday showed a greater-than-expected decline in distillate stocks in the most recent week. Supplies fell by 800,000 barrels. 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.
Prior to Wednesday's surprising rally, prices have slumped in the past week -- the latest leg in a steep correction that has knocked down prices some 25% from their record high of $55.17 in late October. Prices are still up some 37% for the year.