Oil lost all its gains to trade around $80.50 after data showed the U.S. economy grew less briskly than expected last quarter and a plan to give Greece a safety net failed to quell concerns any recovery was fragile.
You had the GDP revised lower and there's still concern about the euro and the euro zone economy, said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.
The U.S. economy expanded at a 5.6 percent annual rate instead of the 5.9 percent originally estimated, the Commerce Department said in its final report for the fourth quarter, albeit still at the fastest pace in nearly seven years.
U.S. consumer sentiment ended unchanged in March from February, with high unemployment and tougher credit standards hanging over the consumer, according to Thomson Reuters/University of Michigan's Surveys of Consumers.
U.S. crude for May delivery was up 1 cent at $80.54 per barrel by 1431 GMT (10:31 a.m. EDT) after trading between $79.59 and $81.46. ICE Brent briefly gained more than $1 to touch a high of $80.68 before slipping back to be up 29 cents at $79.90. It hit a low of $78.77 per barrel earlier in the session.
The U.S. economic data comes after a build up in crude stocks in the country, reported earlier this week, put pressure on oil prices.
This week's hangover from the ... supply inflows is now acting as a background anchor on price action, despite the overnight bounce in the euro, said Mike Guido at Macquarie.
The euro rose broadly after euro zone leaders agreed on a safety net for Greece but the plan did not alleviate longer-term worries about fiscally vulnerable economies in the region.
The European cacophony is not over, Olivier Jakob at Petromatrix said in a note. Trading in (U.S. crude futures) is likely to be dominated again by reaction to the ... plan for Greece, he added.
Carsten Fritsch at Commerzbank said financial investors were stepping into the market around $80 as they bet on a rise in demand led by Asia, supported by tentative signs of recovery in the United States as product stockpiles declined.
But the fundamental supply and demand picture remained weak, he added, providing a likely cap of around $83 on prices.
There's still a risk of a large oversupply in the second quarter leading to a further build in stocks, he said, given a rise in U.S. crude oil inventories and signs that OPEC pumped even more oil in the four weeks to April 10.
(Additional reporting by Robert Gibbons in New York, editing by Anthony Barker)