January 16, 2015 / 2:17 AM / 5 years ago

Oil closes up for first week in eight after supportive reports

NEW YORK (Reuters) - U.S. crude oil prices staunched seven weeks of losses rising 33 cents on the week as it rallied just before settlement because of short covering ahead of the contract expiration Tuesday.

A man fills up his car at a petrol station in Rome January 6, 2015. REUTERS/Max Rossi

Prices received a strong boost from a report by the International Energy Agency (IEA), which said there were signs lower prices had begun to curb production in some areas, including North America.

Another report from the University of Michigan spurred a second rally, due to consumer sentiment being at its highest level in more than a decade, thanks to low gasoline prices and job gains.

“That Michigan number was significant,” said John Kilduff, a partner at Again Capital LLC. It’s a “pretty good harbinger for the economy going forward.”

WTI CLc1 settled up $2.44 at $48.69 a barrel. Global Brent crude futures for March LCOc1 settled up $1.90 at $50.17.

Still, there were headwinds from the dollar. The dollar hit new multi-year highs versus the euro, which dropped to a record low after the Swiss National Bank unexpectedly dropped its currency cap on Thursday. The dollar index .DXY was up .28 percent.

Bullish reports on consumer sentiment and production were beset by several headwinds, making for a volatile market said Tariq Zahir of Tyche Capital Advisors.

Additionally, while reports may indicate increasing demand, the global supply glut is still outweighing it, he said. “Demand is on the increase, it’s still not catching up to supply,” Zahir said.

In China, the second-largest oil consumer, there were signs of weakness as the central bank announced new support measures after data showed a drop in bank lending and foreign investment growth falling to a two-year low.

Oil prices have dropped by nearly 60 percent since June as production around the world has soared, outstripping demand at a time of lackluster global economic growth.

“How low the market’s floor will be is anybody’s guess. But the sell-off is having an impact,” the IEA said in its monthly report on Friday. “A price recovery - barring any major disruption - may not be imminent, but signs are mounting that the tide will turn.

Additional reporting by Henning Gloystein in Singapore and Christopher Johnson in London; Editing by Jessica Resnick-Ault, Dale Hudson,Alan Crosby and Diane Craft

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