Oil held above $61 on Tuesday after rebounding from a six-month low as speculators fear a deepening fall could prompt OPEC to rein in output.
U.S. crude slipped 16 cents to $61.29 a barrel by 0416 GMT, eroding a sliver of Monday's late 90-cent gains. London Brent was 11 cents lower at $60.69 a barrel.
Oil prices dropped to a new six-month low of $59.52 a barrel on Monday as news of BP Plc restoring output at Alaska's Prudhoe Bay added to a sense of healthy global supplies, and investors fretted over the pace of U.S. economic growth.
But they later rebounded on technical buying after prices fell below the psychologically important $60 level, plus a reminder that the Organization of the Petroleum Exporting Countries was on high alert.
The general sentiment is that if prices fall further, OPEC might decide to come in and cut its quota, said Andrew Harrington, an industry analyst at ANZ.
Given the language that some OPEC members are using, the market is interpreting that a price below $60 would be a trigger point for the group to act, he added.
OPEC, which pumps more than third of the world's oil, is concerned about a drop in oil prices but has no plans to call an emergency meeting ahead of its scheduled December 14 meeting in Nigeria, an OPEC source said on Monday.
OPEC has avoided setting a target oil price to defend, but Saudi Arabia's Oil Minister Ali al-Naimi, who steers the policy of the world's biggest exporter, said last week that prices were reasonable, his first such comment since oil hit a peak of $78.40 a barrel in mid-July.
Iran's Oil Minister Kazem Vaziri-Hameneh has said he does not want to see the OPEC price index drop below $60, which equates to U.S. crude at roughly $65.
Fears of a sharp slowdown in the world's largest economy also eased following a smaller-than-expected decline in U.S. August home sales data, Harrington added.
U.S. home sales slipped 0.5 percent to an annual rate of 6.30 million units, the smallest in the last five months of declines, which economists read as the end of the slump for the sector.
U.S. crude had fallen nearly $19 from its mid-July peak, the biggest slide in more than 15 years, as extended diplomatic efforts to end Iran's nuclear program soothed fears of a supply disruption and U.S. winter fuel stocks swelled.
Prices also fell as speculative funds fled the commodities complex, partly due to multi-billion-dollar natural gas trading losses at Amaranth Advisors LLC, a top fund group, limiting any attempt to recover recent steep losses.
There will be less upward pressure as people are a lot more cautious after the collapse of Amaranth, which has highlighted the risk of commodities trading, said Gerard Burg, a minerals and energy economist at National Australia Bank.