NEW YORK (CNNMoney.com) - Oil prices zeroed in on $64 a barrel Wednesday after a government report showed crude inventories declined more than expected, but distillates used for heating rose more than forecast.

U.S. light sweet crude for February delivery rose 57 cents to $63.94 a barrel on the New York Mercantile Exchange, after touching as low as $62.60 during the session. Just before the Energy Information Administration released its report, the contract was down seven cents at $63.30.

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Crude oil inventories fell by 2.9 million barrels in the week ended Jan. 6, compared to earlier estimates from Reuters for a drop of 300,000 barrels. But at 318.7 million barrels, crude oil inventories remain well above the upper end of the average range for this time of year, the report said.

Distillate inventories rose by 4.9 million barrels last week, more than double the 2.2 million buildup economists surveyed by Reuters had anticipated. Gasoline inventories jumped by 4.5 million barrels, versus the forecast 1.8 million barrel rise.

The EIA said that distillate fuel supplies, which include heating oil, are near the upper end of the average range for this time of year, while gasoline stockpiles are in the middle of the average range.

"Right now, warm weather is taking the pressure off distillate demand, but that's not to say it won't get stronger in the next month or two," said Steve Bellino, senior vice president of energy risk management at Fimat USA.

Warmer-than-usual temperatures in the Northeast have cut into heating consumption, and the National Weather Service expects nationwide demand for heating oil to be a third below normal this week.

Despite the warmer weather, instability in the Middle East has helped support prices. Traders were rattled on Tuesday when Iran decided to resume its nuclear research program, raising fears of possible supply disruptions from the OPEC member.

Bellino expects crude to trade between $50 and $70 a barrel this year as energy demand remains high. "The lack of stability in a region rich in this commodity is a concern for people and it's underpinning the price," he added.

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