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Why does the price of an oil contract change on its expiry date?

April 26, 2017contract expiry Oil price

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Why does the price of an oil contract change on its expiry date?

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At 14:30 EST (19:30 UK time) on the expiry date, the current trading contract at FOREX.com expires and all positions and orders are closed or cancelled. When trading resumes, the contract being traded will be the next contract month. Because the whole of the carry cost is included in the price of the contract, it will most likely open at a different price. For example: During the month of May, the contract being traded at FOREX.com will be the contract that is going to be delivered in July (the “July contract”). At 14:30 EST (19:30 UK time) on the expiry date for the July contract, all open positions and orders will be closed/cancelled. When trading resumes, the new contract being traded will be delivered in August, and it may open at a different trading price due to a variety of macro-economic factors.