NEW YORK (Reuters) - Oil jumped more than 6 percent on Friday, headed for its biggest daily gain in more than a year after European leaders hammered out a deal to shore up euro zone banks, but crude was also headed for its steepest quarterly decline since the financial crisis.
The euro jumped nearly 2 percent, and world stocks and gold also rallied after 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.
"We had significant second-quarter trends that may all be in the process of reversing, including the risk off trade triggered by the EU instability," said Tim Evans, energy analyst for Citi Futures Perspective, adding oil demand is normally seasonally stronger in the second half of the year.
"What has changed today is the market sentiment, the fundamentals may evolve at a more glacial pace."
Brent crude oil has fallen by 20 percent in the second quarter, but on Friday the contract for August delivery was up $5.11 to $96.47 a barrel by 1:25 p.m. EDT ( 1725 GMT). The daily gain of more than 5.5 percent, the biggest since May 2011.
U.S. crude was up $6.29 at $83.98 a barrel posting its biggest daily percentage gain since February 2011. It remains down 18 percent for the quarter.
Front-month U.S. July RBOB gasoline rallied 3.5 percent while heating oil surged 5.5 percent. Both contracts expire on Friday.
Total Brent trading volumes exceeded U.S. turnover, but dealings for both were well below 30-day averages nearing midday in New York.
Brent was also supported as a Norwegian oil strike headed for its second week. Operator Statoil (STL.OL) said the strike had cut production of oil and natural gas liquids by 230,000 to 250,000 barrels per day, or up to 13 percent of Norway's capacity.
Oil prices slid this quarter as Europe's spreading debt crisis and slowing global economic growth weighed on demand while rising output from the Organization of the Petroleum Exporting Countries (OPEC) boosted global crude stockpiles.
"Given it's the last day of the quarter we might be seeing some rebalancing and short-covering (by funds) after the falls we've seen," said Katherine Spector, commodity strategist at the Canadian Imperial Bank of Commerce in New York.
"The supply-and-demand balance looks better for the second half of this year, so we expect to see prices move higher from here. We think there will be further reductions in Iran's exports and at the same time other OPEC members are likely to reign in production slightly."
OPEC's oil output has remained close to its highest since 2008 in June as extra oil from Saudi Arabia and Iraq has compensated for a drop in Iranian supply to its lowest level in more than two decades, a Reuters survey found on Friday.
U.S. and European sanctions, designed to target Tehran's disputed nuclear program, have pushed Iran from second-largest producer in OPEC to now rank third behind Iraq. Iran's crude is subject to a European Union embargo starting on July 1 that also bars EU insurance firms from covering Iran's exports.
Saudi Arabia, OPEC's largest producer, has increased its output to 10.1 million bpd to help make up for the shortfall from Iran.
(Additional reporting by David Sheppard and Gene Ramos in New York, Jessica Donati in London and Manash Goswami in Singapore. Editing by Dale Hudson and David Gregorio)