At 12:58 p.m. EDT (1658 GMT), US crude futures were up $2.12, or 2.7 percent, at $78.63 a barrel, having traded as high as $78.92, which matched Monday's intraday high. Crude had bounced from a session low of $75.90.
ICE Brent crude futures were up $1.52, or 1.99 percent, at $77.99, off a $78.32 high.
Trading sources said buy stop orders were triggered when crude moved back toward $79 and that US gasoline futures also rose sharply.
Crude futures trading volume on the New York Mercantile Exchange from 11:50 to 11:55 a.m. EDT (1550-1555 GMT), when crude oil prices moved sharply higher, increased more than four times from the previous five-minute period, according to Reuters data.
US July gasoline futures were up 6.05 cents at $2.1540 a gallon.
A low-pressure area over the western Caribbean Sea now has a high 70 percent chance of developing into a tropical depression over the next 48 hours, the US National Hurricane Center said on Friday.
Some weather models project the system will cross Mexico's Yucatan Peninsula over the next few days before entering the central Gulf of Mexico, threatening BP PLC efforts to clean up
its oil spill.
US crude oil is expected to average $79.86 a barrel in 2010, a Reuters poll showed, a slight drop from May's survey and the second consecutive lower monthly forecast after more than a year of rising expectations.
Front-month US crude futures' $64.24 intraday low on May 20 was the weakest front-month price since $62.76 was struck on July 30, 2009. Prices recovered to a 2010 peak of $87.15 on May
3, but fell back.
Meanwhile, worries about the fragility of the global economic recovery drained strength from financial markets on Friday, with Wall Street taking an agreement on regulatory reform in stride as lawmakers eased off some draconian rules.
The euro erased losses against the dollar and hit a session high, lifted by a slight comeback in stocks and a rally in commodities. That helped the euro fight off earlier weakness amid concerns of fiscal strains in Europe.
On Wall Street, financial stocks gained as uncertainty ebbed following an historic agreement to overhaul financial regulations. Business models were preserved even as provisions cut into profitability and added layers to regulators.
J.P. Morgan Chase & Co. and Bank of America Corp. gained more than 1 percent.
"It is not very different from what investors and we had come to expect in the last few weeks, with the most onerous provisions getting watered down," analysts at Morgan Keegan said in a note to clients.
MSCI's all-country world index declined 0.13 percent, heading for a weekly loss of more than 2 percent and its fourth straight losing session. Its emerging market counterpart slipped 0.53 percent.
In midday trading in New York, the Dow Jones Industrial Average fell 12.84 points, or 0.13 percent, to 10,139.96.
But the Standard & Poor's 500 Index edged up 1.97 points, or 0.18 percent, to 1,075.66 and the Nasdaq Composite Index rose 5.93 points, or 0.27 percent, to 2,223.35.
European shares turned negative after initially bucking the trend. The FTSEurofirst 300 fell 0.7 percent to end at 1,013.58, a two-week closing low, adding to three previous days of losses.
Earlier, Japan's Nikkei average fell 1.9 percent to finish at 9,737.48, its lowest close in two weeks.
The euro overcame earlier weakness to wipe out losses against the dollar and hit a session high at $1.2358, according to trading platform EBS, as traders cited a minor comeback in stocks and the rally in commodities.
The dollar fell against the yen after the earlier report of soft US economic growth.
Earlier in the session, funding concerns in the euro zone have prompted caution as banks need to repay some 442 billion euros in one-year loans to the European Central Bank next week.
The dollar slipped against a basket of major trading-partner currencies, with the US Dollar Index down 0.26 percent at 85.506.
Against the yen, the dollar declined 0.23 percent to 89.33 Japanese yen.
US Treasury debt prices rose after the disappointing report on US economic growth. Benchmark 10-year Treasury notes rose 8/32 in price, while yields declined to 3.11 percent from 3.14 percent late Thursday.
Core euro-zone government bonds struggled to make further headway after three consecutive sessions of gains drove futures to two-week highs. Losses were limited by stock weakness.
Spot gold prices rose $12.00, or 0.96 percent, to $1,256.00 an ounce.
