Oil gains as contract expires

21/01/2009

Crude oil prices gained towards the close of trading yesterday (January 20th) as the February delivery contract neared expiration.

By the close of afternoon trading on the New York Mercantile Exchange, the main contract had reached $38.85 (£28.26) a barrel, up more than $6 on an earlier low.

"The market is also filling the gap between the February and March contract, one activity which we saw in the last two contract expirations," Flynn, an analyst at Alaron Trading in Chicago, told Reuters.

However, heating oil prices fell in New York yesterday, with the February contract dropping more than nine cents to $1.388 a gallon by the end of the day.

This divergence from crude prices could be attributed to the fact that the heating oil delivery contract for next month is still open to trade.

So far this morning, it has made marginal gains in New York, while the new March agreement for crude has risen above $41 a barrel, paring an extended period of losses.