Oil prices rose on Friday, boosting world stock markets, after an energy organization said the oil market may have found a floor, while the euro eased.

Brent crude oil was on track for its third weekly gain after the report by the International Energy Agency, which also said production declines were picking up in the United States and other non-OPEC producers, and an increase in supply from Iran was less dramatic than expected.

Partly offsetting the bullish comments, Goldman Sachs lowered its crude oil price forecasts for this year and next year.

"So now it appears the two sides of the debate are set," said David Thompson at Washington-based commodities broker Powerhouse.

Brent rose 41 cents, or 1 per cent, to $40.46 a barrel, while US crude was up 80 cents, or 2 per cent, at $38.64. US oil was up nearly 8 per cent on the week, which would be a fourth straight week of gains.

Both US and Brent crude prices are up from than 40 per cent from this year's lows.

US stocks rallied in midday trading, helped by gains in energy shares, while MSCI's all-country world stock index jumped 1.6 per cent. The S&P energy index jumped 2.4 per cent.

The Dow Jones industrial average was up 208.7 points, or 1.23 per cent, to 17,203.83, the S&P 500 had gained 27.95 points, or 1.4 per cent, to 2,017.52 and the Nasdaq Composite had added 65.81 points, or 1.41 per cent, to 4,727.97.

In Europe, shares rebounded after falling sharply Thursday, when the European Central Bank signalled it was unlikely to cut its negative interest rates further in the wake of a huge new stimulus plan. The pan-regional FTSEurofirst 300 index ended 2.7 per cent higher.

The euro fell back after rallying the day before on the ECB news. It eased 0.2 per cent to $1.1157 after a surge to more than $1.12 on Thursday.

"A few months ago, if you had expected such measures were going to be deployed, you would have thought the euro would fall 3 per cent," said Gian Marco Salcioli, head of FX sales at Italy's Intesa Sanpaolo Banca IMI in Milan.

ECB President Mario Draghi's suggestion that there would be no further interest rate cuts overshadowed the European Central Bank's bold easing package, prompting criticism that he had once again botched his communication.

US Treasury yields rose in choppy trading as investors bet the US economy was healthy enough for the Federal Reserve to raise interest rates this year.

The benchmark 10-year note yield rose to 1.970 per cent, its highest in six weeks. It was last down 10/32 in price to yield 1.963 per cent, up from 1.929 on Thursday. – Reuters