Oil prices rose to close to $80 yesterday as Tropical Storm Bonnie swirled towards the Gulf of Mexico, and traders awaited European banking stress test results for hints on the economic outlook.

New York's main contract, light sweet crude for delivery in September, hit $79.60 per barrel - last seen on May 5 - winning support also from the weak US currency. It later stood at $78.98, down 32 cents from Thursday's close.

London Brent North Sea crude for September meanwhile weakened by 36 cents to $77.46 in early afternoon deals.

"The main focus has turned to Bonnie and the eurozone banks stress tests," said Sucden analyst Myrto Sokou in London.

The crude market had soared on Thursday as stock markets rallied on upbeat US company results, and as Tropical Storm Bonnie moved towards the oil-producing region of the Gulf of Mexico.

"If Bonnie continues to strengthen, continuing worries about a potential disruption of oil operations in the Gulf of Mexico are likely to move crude oil prices higher to test the $80 area," added Mr Sokou.

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