Crude oil rose a second day in New York as traders purchased futures for February delivery before the contract expires today. Investors who made bets that February oil would fall further closed out their positions today, an action called short covering. The February contract is less expensive than the subsequent month’s price, a condition known as contango. Most months are lower today. “You are seeing a lot of short covering,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “This is going to be an extremely volatile day because a lot of people are playing the contango on the last day of February trading.” Crude oil for February delivery rose $1, or 2.7 percent, to $37.51 a barrel at 11:29 a.m. on the New York Mercantile Exchange. Futures touched $32.70 earlier today, the lowest since Dec. 19. Prices are down 58 percent from a year ago. Floor trading was closed for the Martin Luther King Jr. holiday yesterday. Electronic trades will be booked today for settlement. The more-active March contract increased 3 cents to $42.60 a barrel. Rising U.S. stockpiles and forecasts from the International Energy Agency and OPEC for declining world demand contributed to an 11 percent drop in Nymex crude oil last week. Prices are down 20 percent this year, after tumbling 54 percent in 2008. U.S. inventories probably rose 1.75 million barrels last week, the 15th gain in 17 weeks, according to the median of analyst estimates in a Bloomberg News survey. The Energy Department is scheduled to release its weekly inventory report on Jan. 22, a day later than usual, because of yesterday’s holiday. “Nothing is happening in the news today that explains the movement,” said Michael Lynch, president of Strategic Energy & Economic Research, in Winchester, Massachusetts. “All of the movement is due to expiration.” Brent crude oil for March settlement increased 84 cents, or 1.9 percent, to $45.34 a barrel on London’s ICE Futures Europe exchange.

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