Oil rises to one-year high above $78
Crude settles at a fresh high as investors look past flush inventory levels to focus on upbeat economic news.
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NEW YORK (Reuters) -- Crude oil prices steadied at a one-year high above $78 a barrel Friday after U.S. industrial production grew in September, boosting optimism for an economic recovery.
Oil prices held gains of more than 10%, or $8 a barrel, accumulated over a seven-day rally.
Oil investors shrugged off factors that typically put pressure on prices, including a dip in U.S. stocks that followed disappointing earnings from General Electric (GE, Fortune 500), and a stronger dollar.
The U.S. currency's recent plunge to a 14-month low against a basket of other currencies helped oil to rise over the last week. The currency gained Friday, although it lost some of its earlier strength in afternoon trade.
U.S. industrial production rose in September for a third consecutive month, Federal Reserve data showed Friday. .
U.S. stocks rebounded slightly from earlier lows in afternoon trade.
"Crude oil is just attempting to stay near the highs here, as it stalled after hitting $78," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
U.S. crude oil futures rose by 95 cents a barrel and settled at $78.53 , retreating slightly from a one-year high of $78.75 reached earlier.
U.S. government data Thursday showed an unexpected draw on stocks of gasoline and distillates in the week through Oct. 9, helping boost crude prices, despite a slight build in U.S. crude stocks.
Unseasonably cold weather in the U.S. Northeast, and the specter of storms hitting the top regional consumer of heating oil over the weekend, also helped push up oil prices.
Two complex coastal storms are expected along the U.S. Mid-Atlantic and Northeast coast during the next few days, according to forecaster DTN Meteorlogix.
Oil fell earlier Friday, as some analysts questioned whether the commodity's recent rally was justified, with inventories of crude oil and refined products in the United States, the world's largest energy consumer, still above year-ago levels.
"If you look at the stock situation you will not be buying. There is still an awful lot of stocks," Rob Montefusco, an oil trader with Sucden Financial in London, said.
U.S. crude and product stocks, excluding strategic reserves, remained above 1.1 billion barrels in the week through Oct. 9, according to weekly Energy Information Administration data released Thursday. Stocks were up from year-ago levels of 976 million barrels.
Oil prices had fallen earlier on a strengthening dollar and waning U.S. consumer confidence that could stall any recovery in fuel demand. A stronger dollar makes oil more expensive for holders of other currencies.
The dollar strengthened 0.1% Friday from a 14-month low against a basket of foreign currencies but lost some of its earlier strength in afternoon trade.
Also disappointing investors were quarterly results from Bank of America (BAC, Fortune 500). The S&P 500 stock index was down nearly 1%.
The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for October fell to 69.4, from September's 73.5, due to a "dismal" state of personal finances. 
