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Crude oil futures fell sharply on Wednesday, joining in a sell off hitting precious metals and copper, as selling accelerated amid market talk that a hedge fund was forced to liquidate substantial positions in commodities.

Oil entered into a steep decline just before 11 a.m. EST, diving more than $2 per barrel over 20 minutes with several volumes spikes. Several traders cited rumors that a hedge fund had been forced to sell out of positions across several commodities.

Exiting of long positions built up during the recent rally and the triggering of sell-stop orders accelerated the slide as the U.S. March crude contract approached expiration at the end of the day's session, brokers and traders said.

"It's called long liquidation out of what had become a crowded trade," said Tim Evans, energy futures specialist at Citi Futures Perspective in New York.

Evans added that it was unlikely the market could correct, in a single session, weeks of money managers adding to their net long positions in crude futures and options positions.

Precious metals faltered, with gold hitting a seven-month low and platinum, palladium and silver falling more than 3 percent. Copper prices fell to their lowest in more than a month.

The 19-commodity Thomson Reuters-Jefferies CRB index was down 0.6 percent, touching a session low that was the lowest level since Jan. 11.

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http://www.cnbc.com/id/100472263