Updated from 1:15 p.m. EST

Crude oil prices closed sharply higher Friday, capping a huge surge for the week, with the escalating legal battle between Moscow and the giant Russian oil company


taking center stage.

The January futures contract rose $2.10 to $46.28 a barrel, having traded on the verge of $40 Monday. Despite the gain, prices are down about 17% from their record closing high of $55.17 on Oct. 26.

Forecasts calling for colder-than-normal weather in the Northeast after a recent cold snap renewed concerns about heating oil supplies.

Traders continued to monitor the unpredictable drama surrounding Yukos, whose high-stakes, long-running tax dispute with the Kremlin has roiled the markets from time to time.

In an unusual move this week, Yukos management filed for bankruptcy protection in the U.S. and won an injunction to block the Russian government's planned auction of its Siberian production unit Sunday.

Moscow says the auction will proceed despite the legal decision -- which is of dubious merit -- according to media reports.

The Yukos unit produces about 1 million barrels of oil a day.