* Tropical storm shuts in 28 pct of Gulf oil output
* Equities, oil, shrug off Europe bank stress test results
* Coming up: U.S. new home sales data, Monday, 10 a.m. EDT
(Recasts, updates with settlement prices, market activity)
By Robert Gibbons
NEW YORK, July 23 (Reuters) - U.S. crude oil prices hit an
11-week high above $79 per barrel on Friday then retreated to
close lower, as markets digested the European bank stress test
results while taking support from the temporary loss of some
Gulf of Mexico oil production ahead of Tropical Storm Bonnie.
U.S. crude oil for September <CLUO> delivery fell 32 cents,
or 0.4 percent, to settle at $78.98 a barrel, trading from
$78.40 to $79.60, the highest front-month crude price since
$80.39 was struck May 6.
Supportive economic data and the strengthening of Bonnie
lifted oil prices 3.58 percent on Thursday. For the week, U.S.
front-month crude gained $2.97, or 3.91 percent, after dipping
8 cents to $76.01 last week.
London ICE Brent futures <LCOc1> fell 37 cents, or 0.48
percent, to settle at $77.45 a barrel.
"Oil had a big rise yesterday, as did the stock market, so
oil is just consolidating ahead of the weekend. The fact that
prices are holding up is technically a positive," said Chris
Jarvis, senior analyst at Caprock Risk Management in Hampton
Falls, New Hampshire.
STORM CURBS GULF PRODUCTION
By midday Friday 28.3 percent of Gulf of Mexico oil
production and 10.4 percent of natural gas output had been shut
ahead of Tropical Storm Bonnie, according to the U.S. Bureau of
Ocean Energy Management, Regulation, and Enforcement.
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But the storm is not expected to become a hurricane before
it hits the Louisiana coast on Sunday, the U.S. National
Hurricane Center said in a Friday afternoon report.
[] []
All of the weather models agreed with the NHC that Bonnie
would move northwest across the eastern Gulf of Mexico over the
next couple of days before hitting the Louisiana-Mississippi
coasts.
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TAKE A LOOK-Europe's bank stress tests, click:
[]
Link to the NHC: http://www.nhc.noaa.gov/ Link to
weather models: http://www.skeetobiteweather.com/
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BANK STRESS TEST RESULTS RELEASED
Oil, foreign exchange, and stock markets seesawed on Friday
after seven of 91 European banks were judged not strong enough
to withstand another recession and would face a capital
shortfall of 3.5 billion euros ($4.5 billion), far less than
expected, causing analysts to worry that the tests were too
soft. []
Analysts had expected five to 10 banks to fail the test,
but estimated the capital shortfall could be over 30 billion
euros.
Crude prices hit the intraday peak earlier on Friday when
Germany's Ifo survey showed a jump in business sentiment in
July to its highest level in three years. []
The euro edged up after falling against the dollar
initially after the test results arrived. [] The dollar's
strength early on Friday had helped pressure oil.
Wall Street's reaction to the tests also was muted at
first. U.S. stocks rose as a dividend hike by General Electric
<GE.N> and solid earnings from companies including
telecommunications provider Verizon Communications <VZ.N>
boosted sentiment. []
"Although the late-session equity strength provided
support, some weakening in the euro and apparent evaporation of
some of yesterday's storm premium appeared to restrict upside
price progress," Jim Ritterbusch, president at Ritterbusch &
Associates, said in a note.
The American Petroleum Institute on Friday provided another
assessment of U.S. oil demand. Crude oil and petroleum products
demand climbed 1.7 percent in June from a year ago, on rising
use of distillate and jet fuels, though gasoline demand fell,
the API said in its monthly supply report. []
(Additional reporting by Gene Ramos in New York, Ikuko
Kurahone in London and Alejandro Barbajosa in Singapore;
Editing by Alden Bentley)
