International Energy Agency says oil has bottomed out, pushing WTI to $38
Support for yuan helps push Canadian dollar above 75 cents
Oil prices resumed their climb Friday, with the main North American contract rising above $38 US, after the International Energy Agency said "there are signs that prices might have bottomed out."
The Paris-based organization, which monitors supply and demand in oil markets, said it wasn't predicting a sustained rebound.
But it noted that oil supplies in February fell by 180,000 barrels a day, as non-OPEC producers pulled back in response to lower prices. Oil output is still 1.8 million barrels a day above last year's levels, as Organization of the Petroleum Exporting Countries has boosted its production.
The IEA expressed concern about decelerations in demand growth in China and the U.S., but still predicted demand for oil would expand in 2016 by 1.2 million barrels a day.
On the whole, it was an improved outlook.
West Texas Intermediate crude was up by 70 cents to $38.53 US a barrel. Brent, the international contract, closed at $40.42 US, up 37 cents.
Oil prices have been rising for the past three weeks.
The Canadian dollar rose two-thirds of a cent to 75.58 cents US, riding on higher oil prices and a weakening greenback.
The People's Bank of China allowed the yuan to appreciate in trading early Friday, a move that helped most currencies whose countries export raw materials to China, including Australia, Mexico and Canada.
"The Canadian unemployment rate has ticked up to 7.3 per cent, the highest it's been in three years, but this had a muted effect on Canadian dollar trading," according to Rahim Madhavji, a currency trader with Knightsbridge FX.
He said the loonie is looking for direction from next week's Fed meeting, when the U.S. central bank will make an interest rate announcement.
Toronto stocks were also higher, with the TSX gaining 142 points to 13,522. The energy sector rose by 2.3 per cent.
"Oil seems to have found a bottom, and it's rebounded nicely and energy stocks have skyrocketed off of their lows," said Martin Pelletier, a portfolio manager in Calgary.
Turning point in U.S. output
"And I think investors are catching on to that, and you're seeing some very large moves to the upside over the last couple of weeks." said Pelletier, who is managing director with TriVest Wealth Counsel Ltd. "Some stocks have actually even doubled."
Investors are being "prudent," because they were fooled by signs of a rally in March 2015, he said.
But there seems to have been a turning point with the reduction of U.S. oil output, the first since 2011.
"So we've whittled away at all of the year-over-year growth, and now we're actually starting to see declines in U.S. production," Pelletier said. "And once that train has left the station it's hard to stop.
"And so you're going to see those production declines accelerate, and it actually may surprise forecasts."
With files from The Associated Press, CBC Calgary