* Crude rebounds to hold its 10 percent, weeklong rally
* Oil investors shrug off lower stocks, stronger dollar Do
* U.S. industrial production expanded in September
(Updates throughout.)
By Joshua Schneyer
NEW YORK, Oct 16 (Reuters) - Crude oil prices steadied near
a one-year high above $78 a barrel on Friday after U.S.
industrial production grew in September, boosting optimism for
an economic recovery.
Oil prices held gains of more than 10 percent, 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.N>,
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. <.DXY>
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 <CLc1> rose by 44 cents a barrel to
$78.02 by 1815 GMT, retreating slightly from a one-year high of
$78.17 reached earlier.
Brent crude <LCOc1> was up 33 cents at $76.56.
U.S. government data on 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 percent on Friday from a
14-month low against a basket of foreign currencies <.DXY> but
lost some of its earlier strength in afternoon trade.
Also disappointing investors were quarterly results from
Bank of America <BAC.N>. The S&P 500 stock index was down
nearly 1 percent. <.SPX>
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.
(Additional reporting by Gene Ramos in New York, Ikuko
Kurahone in London and Jennifer Tan in Singapore; Editing by
Christian Wiessner)
