By Robert Gibbons
NEW YORK (Reuters) - Oil rallied on Friday after European leaders hammered out their latest strategy to shore up euro zone banks and preserve the single currency, though Brent and U.S. crude remained on track to post the deepest quarterly losses since the 2008 financial crisis.
Euro zone leaders agreed to let their rescue fund inject aid directly into stricken banks from next year and intervene in bond markets to support troubled member states.
They also pledged to create a single banking supervisor for euro zone banks based around the European Central Bank in a landmark first step toward a European banking union.
"I think the expectation was it would take the EU most of the weekend to reach an agreement, so I think this has taken the market a bit by surprise," said Thorbjoern Bak Jensen, oil analyst at Global Risk Management.
Some consolidation was to be expected after the oil market had posted the steepest quarterly losses since the financial crisis, he added.
A combination of slowed European economies as the debt crisis spread, signs of weaker growth in top oil consumers the United States and China, rising OPEC output and increasing U.S. and global oil stockpiles have put oil on track for losses of more than 20 percent for the second quarter.
Brent August crude jumped $3.96 to $95.32 a barrel by 12:01 p.m. EDT, having reached $95.70 intraday.
U.S. August crude was up $4.51 at $82.20 a barrel, near its $82.41 intraday peak.
Expiring front-month U.S. July RBOB gasoline and heating oil contracts also rallied.
Total Brent trading volumes exceeded U.S. turnover, but dealings for both were well below 30-day averages nearing midday in New York.
Bargain-hunters may also have helped reverse some of the previous session's losses, analysts said, after a steep drop of as much as 3 percent in Thursday's session.
"Oil had a dramatic fall (on Thursday) and there's bound to be some short-covering and bargain-hunting," said Ben Le Brun, a markets analyst at OptionsXpress in Sydney.
(Additional reporting by Gene Ramos in New York, Jessica Donati in London and Manash Goswami in Singapore; Editing by Dale Hudson)
