U.S. Crude Plummets $1.12 a Barrel in Volatile Session

Oil prices sagged $1.12 a barrel Monday on a selloff prompted by the expiration of next month’s futures contract that also depressed other energy futures.

Analysts predicted that the sharp daily price swings that have recently become routine on world energy markets look set to stay.

On the New York Mercantile Exchange, February’s benchmark West Texas Intermediate crude settled at $22.55 a barrel.

That contract expired at the close of trading Monday. Prices often behave in a volatile manner just before they expire as traders try to close out their positions.

Crude’s fall also sent other energy futures lower.

The February heating oil contract fell 2.67 cents to 60.99 cents a gallon and next month’s gasoline contract dropped 0.98 cents to 60.64 cents a gallon.

“Pre-expiration in February crude oil pushed prices initially but then heating oil took off on its own,” said Gerald Samuels, analyst with Shearson Lehman Hutton Inc.

Traders also attributed the sharp decline in heating oil to technical selling.

Some analysts were more upbeat and said they expect current price weakness to be short-lived.

But other players said they expect prices to fall further today and predicted that the sharp price swings look set to continue, with daily 50 cent moves now common in crude oil prices.

“The volatility is due to almost total confusion about the outlook, which caused traders to have knee-jerk reactions to daily factors like the weather,” said Vahan Zanoyan, analyst with the Petroleum Finance Co.