Oil turned higher today, after losing ground earlier in the session partly in response to a lull in fighting in Iraq's southern city of Basra that eased fears of potential supply disruptions from the region.
US crude for May delivery was up 78 cents at $106.40 (€67) a barrel this afternoon. London Brent crude was $1.14 at $104.91 (€66) a barrel.
A fall in the US dollar to session lows against the euro contributed to the turnaround in prices.
Oil had moved above $108 (€68) last Thursday after a bomb attack on the pipeline system feeding Iraq's Basra oil export terminal briefly interrupted flows from southern Iraq for the first time since 2004.
"The restart of the crude pipeline in Iraq late last week was the key factor in pushing oil prices down," said Gerard Burg, a resource analyst at the National Bank of Australia in Melbourne.
"The volatility in the dollar also encouraged some sell-off in the energy markets."
Iraq's production and exports had been cut by about 100,000 barrels per day, an Iraqi oil official said, adding that the disruption would finish on Tuesday.
Analysts said the market remained uneasy about security in the Middle East as well as threats of further supply disruptions.
Oil industry unions in Gabon have threatened a nationwide strike if they fail to reach a deal to end a stoppage at Shell's subsidiary in the country, where 60,000 barrels per day is shut.
A Nigerian oil workers' union has also threatened industry-wide strike action over a dispute with ExxonMobil
"The (Iraq) supply disruption and the market reaction to it underscore how a finely-balanced oil market continues to be vulnerable to supply disruptions and that the political instability in some producer countries like Iraq and Nigeria is still far from being resolved," Goldman Sachs said in a research report.
Oil reached a record high of $111.80 (€70.77) a barrel on March 17, propelled by long-term supply constraints that have so far outweighed the impact on demand from an economic slowdown in top energy consumer United States.
But analysts expect demand to weaken as a result of the US downturn and are also wary of the effects of the credit market crisis that is still causing problems in financial markets.