OIL FUTURES: Crude Rises Above $86 Ahead Of Holiday, Expiry

NEW YORK (Dow Jones)--Light, sweet crude oil futures rallied above $86 a barrel at midafternoon Thursday as traders detected a tighter market for near-term supplies in the U.S.

Front-month March-delivery crude oil futures on the New York Mercantile Exchange expire at Tuesday's settlement, following the market's closure on Monday for the Presidents Day holiday, traders said. That has generated a spurt of buying in near-term contracts against the backdrop of simmering tensions in the Middle East, the global oil patch.

March crude traded to a high of $86.50 a barrel, the highest intraday level since Monday. The contract last traded at $86.28 a barrel, up $1.29 and was on course for the highest settlement price in a week. April-delivery crude was traded above $88 and the spread between the two months narrowed considerably from $4 a barrel earlier this week to about $1.50 a barrel Thursday.

Traders said the fact that gasoline and heating oil futures, and ICE North Sea Brent continued weak as the Nymex crude contracts rallied showed the activity it tied to a realigning the market. ICE Brent for April delivery was down 62 cents at $103.16 a barrel.

News that Iran planned to send two warships through the Suez Canal and clashes between police and protesters in Bahrain continued to "raise the tension a notch" in the market, said Tom Bentz, broker and analyst at BNP Paribas in New York. Bahrain sits at the end of a 16-mile causeway from Saudi Arabia, the world's biggest oil exporter and Manana, the capital, where antigovernment protesters were planning a massive rally on Friday, is just 260 miles from the Saudi capital.

(Source: http://online.wsj.com)