Stocks extended highs by mid-morning Friday, putting Wall Street on track for its fourth straight week of gains. Markets were sharply higher as crude oil surged on forecasts from a top energy watchdog. 

The S&P 500 rose 1%, trading above 2,000 again. The Dow Jones Industrial Average added 1%, and the Nasdaq was up 1.2%, pulling out of correction territory. 

Crude oil prices recovered a level above $38 a barrel on Friday morning, touching their highest level of the year, after a report from the International Energy Agency indicated spiraling prices may be coming to an end. The energy watchdog said markets would likely not see a recovery until 2017, but that recent signs give hope that stabilization is possible.

The IEA pointed to "possible action by oil producers to control output; supply outages in Iraq, Nigeria and the UAE; signs that non-OPEC supply is falling; no reduction in IEA's forecast of oil demand growth; and recent weakness of the U.S. dollar" as possible forces that could stabilize prices.

Oil prices have slowly recovered in recent weeks after hitting a panicked low in February of $26 a barrel. West Texas Intermediate crude oil was up 1.8% to $38.57 a barrel on Friday morning.

Equities were also higher in what appeared to be a delayed reaction to the European Central Bank's latest stimulus moves. European markets climbed as investors digested the ECB's latest rate cut and expansion to its bond-buying program. Good vibes had quickly soured on Thursday after ECB President Mario Draghi made clear that additional rate cuts were unlikely.

"From today's perspective and taking into account the support of our measures to growth and inflation, we don't anticipate that it will be necessary to reduce rates further," Draghi said at a press conference.

U.S. stocks initially reacted positively on Thursday, starting the day with a rally before plummeting to heavy losses by midday. But benchmark indexes recovered to the flatline by day's end.

The trade sector was again hit by weaker energy prices in February. Import prices fell 0.3% last month, their eighth straight month in decline, according to the Labor Department. Export prices slid 0.4%. Excluding energy, import prices fell 0.1%. Import prices have fallen 6.1% over the past 12 months, contributing to weaker U.S. inflation.

TransCanada(TRP) - Get Report was nearly 1% higher on reports it is in talks to acquire Columbia Pipeline Group (CPGX) . The deal could be worth as much as $10 billion, according to The Wall Street Journal. TransCanada is currently seeking $15 billion from the U.S. government on allegations the Obama Administration is unconstitutionally blocking the Keystone XL Pipeline.

Chevron(CVX) - Get Report climbed more than 1% after Goldman Sachs analysts upgraded to 'neutral' from 'sell.' Analysts said higher oil prices would improve its outlook.

Bojangles(BOJA) - Get Report rose 10% after reporting quarterly earnings of 22 cents a share, 3 cents above estimates. Same-store sales increased 0.6%.

El Pollo Loco(LOCO) - Get Report fell 7% after issuing weaker-than-expected guidance for 2016. The chicken chain also reported disappointing quarterly sales of $86.3 million, below a forecast $90 million. El Pollo Loco said recent sales initiatives would take time to gain momentum.