Oil prices pared gains today after an early rise in response to a weak dollar and Israeli attacks on Hamas that raised concern about Middle East crude oil supplies.
US light, sweet crude was up 64 cents at $38.35 a barrel by 12.01 pm EST (1701 GMT), below a session high of $42.20.
Oil is on track for a nearly 60 per cent loss this year, the biggest annual fall since futures began trading 25 years ago.
London Brent crude rose 67 cents to $39.04 a barrel, after touching a session high of $43.18.
"You had two different sides to the market: early on an initial emotional run up and, as the day wore on, cooler heads prevailed and selling started to come in," said Phil Flynn, analyst at Alaron Trading, Chicago.
Israeli aircraft attacked Hamas targets in Gaza on the third day of an offensive that has killed more than 300 Palestinians, many of them civilians.
The attacks enraged Arabs across the Middle East, raising concerns that the conflict could threaten oil supplies from the region.
But economic worries should outweigh geopolitics in the Middle East. The dollar fell broadly, pressured by the gloomy outlook for the U.S. economy.
Oil is down more than $100 a barrel from a record peak of more than $147 in July, depressed as the downturn in the world economy has hit demand for fuel.
Prices on Friday had broken a nine-session losing streak, partly on evidence of Opec compliance with its biggest ever production cut, agreed in December, to fight the market's slide.
Reuters