Crude oil futures rallied during Asian trading hours Friday after European Union leaders agreed on support for Spain and Italy.

Light sweet crude for August delivery surged 2.57 percent or $2.00 cents to $79.69 a barrel in electronic trading on the New York Mercantile Exchange during Asian trading hours while Brent crude oil futures for August delivery gained 1.86 percent or $1.70 to $93.06 a barrel on the ICE futures exchange in London.

European Council president Herman Van Rompuy said early Friday that the EU leaders agreed to use the bailout funds the European Financial Stability Facility (EFSF) and European Stability Mechanism (ESM) by Spain and Italy to help them recap their struggling banks.

The market was almost caught by surprise that something of substance came out of the summit. We will get more details and timeline of the implementation of this plan and that will be instrumental to whether the gains will be sustained, Tim Waterer, a senior trader at CMC Global Markets in Sydney, was quoted as saying by Reuters.

The rise can also be attributed to a cut in Norwegian oil output. The strike has reduced output at the world's eighth largest oil producer by 290,000 barrels per day compared to 240,000 barrels per day earlier this week.

Meanwhile, the prices also get support from bargain hunting after a steep drop of as much as 3 percent in the previous session. On Thursday, light sweet crude for August delivery plunged 3.1 percent or $2.52 and settled at $77.69 a barrel on the New York Mercantile Exchange, the lowest closing level since Oct 4.

The price of crude oil in New York trading has fallen more than 20 percent in the last three months following concerns over the deepening euro zone sovereign debt crisis and waning global oil demand while Brent has fallen more than $35 a barrel since hitting $128.40 in early March.