Oil recovered from earlier losses and rose toward $78 a barrel on Thursday, as concern over Spain's public finances eased in global markets following the results of its well-covered bond auction.
But gains in U.S. crude prices were limited by an unexpected rise in jobless claims in the United States, adding to worries that economic recovery in the world's top oil consumer is slowing.
By 1327 GMT, U.S. crude oil futures were trading 13 cents lower at $77.54 a barrel, having turned positive briefly.
ICE Brent for August rose 80 cents to $78.94.
Spain sold just under its target amount of 3.5 billion euros ($4.29 billion) of 10-year and 30-year government bonds on Thursday. Analysts said the sale went well after the bonds cheapened considerably ahead of the sale.
It followed a report, denied by the European Union and the International Monetary Fund, that they and the U.S. Treasury were drawing up a safety net for Spain.
The euro rose to a three-week high against the U.S. dollar.
Analysts said the Spanish bond auction was influencing oil and global markets, overshadowing relatively ample oil supplies.
A strong bond auction by Spain is a strong sign that the market is more relaxed about European financial problems, and as European financial fears relax, Brent crude oil gains in strength, JP Morgan analysts said in a research note.
The bank pointed out the gain in Brent prices were additionally positive as they rose despite the cancellation of a Norwegian oil workers.
Norwegian offshore oil workers landed a wage deal with energy companies on Thursday, averting a strike that had threatened production in three oil and gas fields in the North Sea.
Analysts said the prompt U.S. crude contract came under pressure due to ample supply and the U.S. jobless claims data.
Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 472,000 in the week ended June 12, the Labor Department said on Thursday.
Analysts polled by Reuters had expected claims to fall to 450,000 from the previously reported 456,000, which was revised to up to 460,000 in Thursday's report.
Crude oil and oil product inventories in the United States, such as gasoline, remained much higher than a year earlier, the government data on Wednesday showed.
(Additional reporting by Alejandro Barbajosa in Singapore; editing by Alison Birrane)