Oil trimmed earlier losses and was trading above $77 a barrel on Thursday, as anxiety over Spain's public finances eased in global markets following the results of its well covered bond auction.
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.
By 1025 GMT, U.S. crude oil futures were trading 49 cents lower at $77.17 a barrel, having fallen to as low as $76.78 before the auction.
ICE Brent for August reversed earlier losses and was trading 29 cents up at $78.43.
The euro rose to a three-week high against the dollar.
Analysts said the Spanish bond auction was influencing oil and global markets, overshadowing relatively ample oil supplies.
A higher euro against the dollar as a result of the Spanish bond auction is in focus now, rather than oil's fundamentals. Risk appetite is also back, Commerzbank analyst Carsten Fritsch said.
The market will also watch the release of economic data from the United States, the world's top oil consumer, including weekly jobless claims and May consumer price index at 1230 GMT.
Earlier in June, the International Energy Agency said U.S. oil demand had increased marginally as some economic recovery boosted industry fuel consumption, while Europe's oil demand would remain weak due to its sluggish economy.
Gains in oil prices could be limited by ample supply and by some profit taking sell offs following the three day rally to Wednesday, when oil closed at the highest settlement since early May.
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.
In Europe, 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.
(Additional reporting by Alejandro Barbajosa in Singapore; editing by Alison Birrane)