Light, sweet crude for September delivery rose 23 cents to $113.24 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe. The contract dropped $1.44 overnight to settle at $113.01 a barrel.
Nymex crude is down about $33, or 22 percent, from its high of $147.27 on July 11.
"I think a drop of 20 percent is a bit over done," Kornafel said. "We've fallen too far, too fast. I expect the market to sit between 110 and 120 in the short-term."
Investors are waiting for a report by the U.S. Energy Department's Energy Information Administration on U.S. oil stocks for the week ended Aug. 8 later in the day. The petroleum supply report was expected to show that crude stocks rose by 500,000 barrels, according to the average of analysts' estimates in a survey by energy research firm Platts.
A cease-fire declared by Russia and Georgia in their conflict over South Ossetia appeared to have reduced any concerns that hostilities there would have a major effect on oil shipments through Georgia.
Investors "have taken profits as they've seen demand destruction in the U.S. and they're seeing it spread a little into Europe," said Jonathan Kornafel, Asia director for brokerage Hudson Capital Energy in Singapore.
The Platts survey also showed that analysts projected gasoline inventories to have fallen 2.2 million barrels and distillates to have risen 1.9 million barrels during last week.
Any fall in gasoline supplies would come despite indications that the high price at the pumps is putting a crimp in demand.
Vienna's JBC Energy cited the latest report from MasterCard Advisors, showing that "U.S. gasoline demand last week was almost 4 percent lower compared to the same week in 2007 despite a considerable decline in retail prices."
Gasoline prices gained more than 2 cents to $2.8680 a gallon (3.8 liters). In other Nymex trading, heating oil futures gained nearly 2 cents to $3.0973 gallon (3.8 liters), while natural gas futures rose 7 cents to $8.4 per 1,000 cubic feet.
In London, Brent crude for September delivery rose 76 cents to $111.91 a barrel.
The International Energy Agency lowered its forecast on Tuesday for oil product demand from 30 developed countries, located mostly in Europe and North America, to 48.6 million barrels a day, down 1.3 percent from last year.
The Paris-based energy watchdog's report arrived a day after China said its crude imports in July, while historically strong, were down 7 percent from the same month last year.
The IEA cautioned that it is too early to determine whether the recent fall in oil prices is a longer-term trend. It said demand in developing countries could offset declines in developed nations, and that it sees Chinese oil demand continuing to grow at a robust pace.
"The question is where will the number level off at for China in the next few months," Kornafel said. "China is an enormous driver for the price of oil, along with India, Brazil and the Middle East."
