Het is 38.94 geworden.
NEW YORK (MarketWatch) -- Crude-oil futures ended higher Tuesday, as traders short selling February oil engaged in last-minute buying to cover their positions before the front-month contract's expiration.
Crude for February delivery, which registered low volume and expired at the end of trading Tuesday, finished up $2.23 at $38.74 a barrel on the New York Mercantile Exchange.
The February contract earlier slumped more than 10% to $32.70 a barrel, the lowest intraday level for a front-month contract since Dec. 19. It then erased the big loss and rallied as much as 8% to $39.55.
The February contract has seen extra volatility due to the expiration, analysts said.
"There is a lot of last-minute positioning," said Phil Flynn, vice president at futures brokerage Alaron Trading in Chicago. "Expiration is going to be wild."
Traders short sell oil by borrowing futures contracts and selling them at a certain price, hoping prices will fall so that they can buy back the contracts at a lower price and pocket the profit.
While some traders bought the contract to cover their short positions Tuesday, others who wanted to avoid physical oil delivery may be forced to sell their contracts, thus adding downward pressure on prices, analysts said.
On Dec. 19, when January futures expired, the contract slumped as much as 10% to $32.40 a barrel, the lowest since early 2004.
Crude inventories at Cushing, Okla. -- the delivery point for Nymex oil futures -- jumped to 33 million barrels in the week ended Jan. 9, the highest level on record. Operable storage capacity stands at about 34 million barrels, as estimated by Platts.
As Cushing inventories reach the maximum level, storage costs have jumped and some investors may have to sell their contracts to avoid taking delivery.
The oversupply at Cushing "may have loosened the traditional price connections to related markets," said Nimit Khamar, an energy analyst at Sucden Financial Research, in a note.
The March contract, which was trading about $2 higher than the February contract, "will be exposed when it becomes the front-month to similar weak demand and oversupply concerns," Khamar said.
Futures traders call the situation, in which the price of a short-term futures contract is worth less than a longer-term one, contango.
Het begint er aardig op te lijken dat de mannen van de olie compleet de weg kwijt zijn. De olieprijs zal navenant reageren, geen touw op te trekken.