US light crude gained 15 cents to $43.62 a barrel, after falling $1.74 to settle at $43.47 a barrel on the New York Mercantile Exchange, its lowest closing level since August 4 and the fourth straight day of declines.
Prices are now down nearly $6 from record highs last week. Brent crude regained 12 cents to $40.80 a barrel in trade after ending $1.64 lower on Wednesday.
The sell-off came after ample US gasoline stocks showed that demand from motorists ahead of the Labour Day holiday weekend in September, which usually marks the end of peak summer consumption for motor fuel, did not meet bullish expectations.
Traders are also watching developments in Iraq, where hopes for an end to violence in Najaf with the impending visit of the top Shiite leader in the holy city on Thursday and the return of most oil flows, are mixed with concerns over sabotage attacks.
"The market collapsed yesterday after the EIA states came out. Any shorts in the market are probably covering after the big down day, but the long-term upturned that's been going on for a year still looks to be intact," said John Brady, a New York-based broker with ABN Amro.
"Certainly for the moment there's a lot of length being forced out of the market, but it's difficult to say if the top has been reached.
Sellers swamped the market after the government Energy Information Administration (EIA) said US gasoline stocks were unchanged at 205.7 million barrels in the week ended August 20, near the upper end of their five-year average.
Analysts had expected gasoline supplies to drop due to summer vacation consumption, but the EIA said gasoline demand over the past four weeks was just 0.7 percent higher than last year.
The gasoline figures overwhelmed the more bullish crude inventories, which fell 1.7 million barrels to 291.3 million barrels, against analysts' forecasts for a rise due to storm-delayed shipments the previous week.
Distillate inventories rose 500,000 barrels to 125.1 million barrels, the EIA said. Oil prices have been sliding since failing to break the $50 mark last on Friday as fears of a major supply disruption have eased with Iraqi exports back on track and Russia's YUKOS continuing oil sales despite financial turmoil.
Iraq restored full crude exports of 2 million barrels per day (bpd) from its southern Basra fields and resumed deliveries at 450,000 bpd, or at half capacity, from its northern Kirkuk fields for the first time since May.
Traders hope the situation in Iraq would improve with the return of Grand Ayatollah Ali al-Sistine, the most powerful voice of moderation in the tormented country.
Aides said Sistine would unveil an initiative to get Shiite rebels out of the revered Imam Ali mosque in Najaf and end their three-week uprising against Iraqi government forces and US.
Still, fears persisted that the influx of large numbers of Shiites from rival groups into the conflict-torn city could stoke tensions and worsen the violence.