Updated from 1:01 p.m. EDTCrude oil futures pulled off their greatest one-day price climb at the New York Mercantile Exchange Monday. Crude started out strong in the morning, and by 2 p.m. EDT, the October WTI contract was up roughly $7 a barrel to about $113 a barrel. Then, prices suddenly launched above $130 in the most intense 15 minutes of buying that oil markets have ever experienced. At that point, the Nymex briefly halted trading of that particular contract. Short-sellers, who were forced to cover their positions ahead of the looming expiration of the October WTI contract, served as the nitrous oxide that propelled already revving crude oil markets into overdrive. October WTI crude oil ultimately closed up $16.37, or more than 15%, at $120.92, while the November WTI contract rose $6.62 to $109.37 a barrel. Brent crude oil rose $6.43 to $106.09 on the ICE exchange. The November contract will convert to the front-month spot contract on Tuesday. Unlike most futures markets for other assets, energy markets at the Nymex are physical markets in which raw energy commodities are delivered to those who are in possession of futures contracts when they expire. This attribute nearly always creates a situation in which energy futures spike in value and then quickly slide down again immediately before they are set to expire.
The setup also puts companies that need raw crude oil in a defensive position relative to speculative traders who can afford to hold raw crude oil in front of companies and demand the most attractive sales price. Most other futures markets have converted to cash-settled models in order to prevent this power from being abused. Elsewhere, energy stocks mostly advanced Monday, although stock traders were ultimately unmoved by the bull-run raging in the commodity pits. BP ( BP - Get Report) climbed 1.1% to $55.16, Conoco ( COP - Get Report) and Chevron ( CVX - Get Report) both slid fractionally to $77.72 and $87.33 respectively, Royal Dutch Shell ( RDS.A) gained almost 2% to $63.60, and Exxon Mobil ( XOMN) fell 0.9% to $78.88. U.S Oil Fund ( USO - Get Report), an exchange-traded fund that tracks the daily performance of the spot WTI contract, rose $4.99, or 6%, to close at $87.62 -- well below the performance of the spot WTI futures contract on Monday. Michael Seneadza, a professional energy trader and publisher of the blog "Trader Mike," said that USO's underperformance of WTI likely occurred because the ETF had already rolled out of its positions in the spot contract. The U.S. Oil Fund is actively managed and invests in a number of other energy products besides WTI spot futures contracts.