* Canadian dollar at C$1.3333, or 75 U.S. cents
* Bond prices higher across the yield curve (Updates prices, adds analyst comment)
TORONTO/OTTAWA, March 29 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday as the price of oil, one of Canada's major exports, rose for the second day in a row.
U.S. crude inventories grew less than expected, while Libyan supply disruptions, and expectations that an output cut led by the Organization of Petroleum Exporting Countries would be extended all helped send oil prices higher. O/R
U.S. crude CLc1 futures settled up $1.14, or 2.4 percent, at $49.51 a barrel.
The loonie was able to climb against the greenback even as the U.S. dollar was stronger against a basket of major currencies .DXY after a Reuters report that European Central Bank policymakers were wary of making any changes to their policy message in April pressured the euro. USD/
"We're seeing oil prices really rally after the better-than-expected inventories report this morning so that's been the main driver of the Canadian dollar," said Scott Smith, chief market strategist at Viewpoint Investment Partners in Calgary.
The Canadian dollar CAD=D4 settled at C$1.3333 to the greenback, or 75 U.S. cents, stronger than Tuesday's close of C$1.3383, or 74.72 U.S. cents.
The currency's strongest level of the session was C$1.3323, while its weakest level was C$1.3401. The day's strength marked a bounce-back from Tuesday when it touched C$1.3415, its weakest in nearly two weeks.
The steady bias on Wednesday for the currency came one day after the Bank of Canada stuck to its cautious tone. The nation's economy would tip into recession if interest rates were raised today, said Stephen Poloz, the central bank's governor. economists expect Canada's gross domestic product to show 0.3 percent growth for January, which could set the stage for a stronger performance in the first quarter than initially expected. ECONCA
The January GDP data is due for release on Friday.
Canadian government bond prices were higher across the yield curve, with the two-year CA2YT=RR up 3 Canadian cents to yield 0.725 percent and the 10-year CA10YT=RR rising 29 Canadian cents to yield 1.593 percent.
On Tuesday, the two-year yield hit its lowest in nearly seven weeks at 0.719 percent.