"Genscape detects the shutdown of the 70,000 bpd (fluid catalytic cracking unit) during the overnight hours," it said in a report.

Gasoline futures hit a high of $2.8376 per gallon on the news, then pared gains. Earlier, they traded as low as $2.80.

US crude oil futures traded up to $93.95 per barrel on the news, after trading as low as $93.04.

Brent crude oil traded above $102/bbl after dropping to a low of $101.65.

Traders said the US equity market's steady recovery from earlier lows supported oil prices, which moved largely in tandem with the stock markets.

They also cited US crude's failure to break through its 200-day moving average, a technical support level. After briefly trading slightly below it, US crude began climbing back up and never looked back, and Brent crude prices rose in lockstep.

Brent crude settled down 16 cents to $102.44 a barrel, recouping losses of nearly $2 after earlier reaching $100.64, its lowest price since May 2. Prices are still down sharply from a 2013 high of $119.17 reached on Feb. 8.

US crude ended nearly flat, down 3 cents to $94.25 and even briefly going positive in post-settlement trading. It had earlier lost more than $2 in intra-day trading.

"Equities are holding in pretty well, and the market's in an uptrend with equities, but nothing else has fundamentally changed," said Bill Baruch, senior market strategist at iitrader.com in Chicago, Illinois.

"There's a large short position in the market and the funds are covering positions before the holiday weekend," he added, referring to the forthcoming Memorial Day holiday in the United States.

A decline in China's factory activity had entrenched concern about weak demand in the world's second-largest oil consumer, weighing on prices in early trading.

Oil prices bottomed out around 10 a.m. EDT (1400 GMT) after the release of strong US housing data stoked worries about a tapering of US Federal Reserve stimulus, sending equity markets down.

"It's a pretty volatile session. We bounced back and are following the equity markets a bit," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.

The tender process will take place in late October, said Magda Chambriard, director of the National Oil Agency. New estimates are that the so-called Libra oil field holds between eight billion and 12 billion barrels of oil -- the largest find ever in Brazil, she said.

The field covers 1,500 square kilometers and lies in ultra-deep waters under a thick layer of salt.

By way of comparison, the so-called Marlim field, which is the most productive one Brazil now has operating -- at 600,000 barrels per day -- has a recoverable oil volume of 2 billion barrels, Chambriard said.

Another, called Roncador, has 2.5 billion, she added. But Libra is another thing altogether.

"I have worked in the oil industry for 30 years and have never seen anything like it," she said. "Something this size will raise eyebrows all over the world."

Brazil's sprawling pre-salt oil reserves were first discovered in 2007.

Libra will be auctioned off as a single bloc, under 2010 legislation that increases the government's control over the pre-salt reserves and its share of the profits.

New York's main contract, West Texas Intermediate light sweet crude for July, edged down three cents to settle at $94.25 per barrel. WTI had hit an intraday low of $92.21.

Brent North Sea crude for delivery in July settled at $102.44 per barrel, down 16 cents from Wednesday.

"Oil prices have continued their recent declines for the third day in a row on both Brent and WTI as economic data continues to point to reduced demand against a backdrop of high inventories," said CMC Markets analyst Michael Hewson.

HSBC bank reported China's manufacturing output contracted in May, raising concerns about energy demand in the world's second-largest economy.

"The market was kind of reeling in the morning with the news" from China, said Rich Illczyszyn of iiTrader.com.

But WTI found "pretty tough resistance" at the $92 level, he said, and pulled back from its lows as traders were looking for buying opportunities after Wednesday's sharp drop and preparing for the long holiday weekend.

"People don't want the risk of exposure and going home for the Memorial Day weekend with a big short position," Illczyszyn said.

US gasoline demand is expected to surge this weekend as the Memorial Day holiday Monday kicks off the summer vacation driving season.

US equities fell in choppy trading, with the Dow briefly down more than 1 percent, after the Fed released minutes of its April 30-May 1 meeting. The minutes indicated a debate over how soon to start scaling back the central bank's bond-buying program of economic stimulus.

Brent crude futures fell $1.31 to settle at $102.60, after shedding nearly a dollar in the previous session. Brent prices fell further in post-settlement trading, down $1.52 at 4:54 p.m. EDT (2054 GMT).

US crude settled down $1.90 at $94.28 a barrel, its biggest one-day loss since May 1. It extended losses in post-settlement trading, sliding as low as $94.01.

"You had a couple of Fed governors talking about ending quantitative easing as early as June, and because of that, people are thinking 'Oh, the Fed is done,'" said Mark Waggoner, president at Excel Futures in Bend, Oregon.

"If there's uncertainty, people want to take profits off of these highs. Then if the economy slows, demand slows for crude oil."

Earlier, the US government's Energy Information Administration said gasoline inventories rose by 3 million barrels last week, suggesting the US domestic fuel market was well supplied for the peak driving season.

US crude inventories fell by 338,000 barrels, the EIA report showed, but stocks at the Cushing, Oklahoma, crude storage hub rose 449,000 barrels to 50.172 million barrels.

Analysts had expected crude stocks to drop by 800,000 barrels and gasoline stocks to remain unchanged from a week ago.

"The fundamental picture remains weak, and that seems to be what's weighing on the market," said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut.

"Every time we approach $98 on US crude, the fundamentals drag the market back towards $90."

US gasoline fell 2.5 cents to $2.82 a gallon, having hit a session low of $2.79. Gasoline has slid nearly 4 percent since May 17, when it touched $2.93, its highest in a month.

"Concerns over inventories had produced the recent rally, and gasoline's strength spilled over into the rest of the complex," said John Kilduff, partner at Again Capital in New York.

The price of US benchmark West Texas Intermediate for July delivery settled at $94.28 per barrel on the New York Mercantile Exchange, down $1.90 from Tuesday.

The price of European benchmark Brent North Sea crude for delivery in July closed at $102.60 per barrel in London, a drop of $1.31.

The market sell-off followed a US inventory report that showed crude oil inventories declined by 300,000 barrels last week, less than the 600,000 drop forecast by analysts in a Dow Jones Newswires survey.

Even more dramatic, gasoline inventories rose by three million barrels whereas analysts had predicted a 100,000-barrel decline.

The gasoline figures were "weighing on the complex," Again Capital trader John Kilduff said of petroleum investments.

"The report continues to underscore the bearishness of fundamentals," said Gene McGillian, broker and analyst at Tradition Energy, who cited lofty supplies of crude at the important Cushing, Oklahoma, hub.

Meanwhile, analysts grappled with the message behind Federal Reserve Chairman Ben Bernanke's testimony Wednesday to Congress. Although Bernanke stressed that economic conditions do not warrant an end to the Fed's aggressive stimulus measures, he also said the Fed could pull back in the next few meetings if economic conditions improve.

Bernanke's remarks were "kind of murky," McGillian said.

"I don't think the market got a real signal from that testimony," McGillian said.

But investors' reaction suggested that the market took Bernanke's remarks as a sign that the Fed will curtail the bond purchases in the foreseeable future.

Equity markets fell soon after the testimony, while the US dollar rallied against other currencies, a sign the market thinks the US retreat from easing will precede monetary tightening in other major economies.

"At some point they'll be some tightening," said Kyle Cooper, managing partner at IAF Advisors in Houston, Texas. "That's why equities are down and crude is following equities."

"The natural gas rally continued for yet another session, not a major surge, but a decent three-day rally which is looking more like new buying is starting to come back into the market after two weeks in a row of the speculative community reducing their net natgas long positions," said Energy Management Institute's Dominick Chirichella.

The latest NYMEX natural gas open interest data available showed open interest rose by 4,910 contracts on Monday, the first gain in 13 sessions.

Front-month June natural gas futures on the New York Mercantile Exchange rose 10.2 cents, or nearly 2.5 percent, to settle at $4.192 per million British thermal units.

The nearby contract hit a one-month low of $3.883 on May 9 after climbing to a 21-month high of $4.444 on May 1.

Other months also rose on Tuesday, but failed to outpace the front month's gains. Summer months rose less than 10 cents each.

In the cash market, gas for Wednesday delivery at the NYMEX benchmark Henry Hub in Louisiana rose 3 cents to $4.13, with late deals firming to even with the June contract, from deals done late Monday at a 4-cent discount.

Gas on the Transco pipeline at the New York citygate rose 9 cents to average $4.46.

The latest National Weather Service six to 10-day forecast issued Monday called for above-normal temperatures for about the eastern two thirds of the nation and below-normal readings only on the West coast.

Nuclear plant outages totaled 15,900 megawatts, or 16 percent of US capacity, down from 16,600 MW out on Monday, 17,300 MW out a year ago and a five-year average outage rate of 16,200 MW.

Baker Hughes drilling data last week showed the gas-directed rig count rose by four from the prior week's 18-year low of 350.

Early injection estimates for Thursday's gas storage report from the US Energy Information Administration range from 85 billion cubic feet to 99 bcf versus a 75-bcf build during the same week last year and a five-year average rise for that week of 90 bcf.

After the market settled, the American Petroleum Institute said US crude oil stocks rose by more than 500,000 barrels last week, trumping analyst expectations for them to fall, while gasoline stocks jumped by 3 million barrels.

Brent crude oil futures for July delivery ended the session 89 cents lower at $103.91 per barrel, after trading above $105 and to a low of $103.51.

US June crude oil futures, which expired on Tuesday, finished 55 cents lower at $95.16 a barrel after trading between $95.50 and $96.97. The more heavily traded July contract ended 75 cents lower at $96.18 a barrel.

After settlement, prices dipped slightly in electronic trading following release of the API data, but remained within the day's trading range.

The spread between US crude oil, also known as West Texas Intermediate (WTI), and Brent crude narrowed to its lowest in a week at $7.62 a barrel, but settled at $7.73.

The API said crude stockpiles at Cushing, Oklahoma, delivery point of the US crude oil contract, rose by 459,000 barrels last week.

Prices took some support during Tuesday's session after a senior Federal Reserve official said he did not believe the US central bank should pull back on its quantitative easing program.

St. Louis Federal Reserve Bank President James Bullard, a voting member of the Fed's policy-setting committee this year, said inflation is too low to taper bond purchases.

The Fed is currently buying $85 billion in Treasuries and mortgage-backed securities each month to ease borrowing costs.

Financial markets await Federal Reserve Chairman Ben Bernanke's testimony to Congress at 10 a.m. EDT (1400 GMT) on Wednesday and the release of the Fed's meeting minutes.

Any hint that the Fed will slow the current bond buying policy should boost the dollar, potentially weighing on crude oil and other commodities priced in the greenback as they become more expensive for buyers using other currencies.

The market also awaited the US Department of Energy's weekly report Wednesday on the nation's commercial petroleum reserves, whichhave hovered near record highs in recent weeks.

New York's main contract, West Texas Intermediate light sweet crude for June, fell 55 cents to $96.16 a barrel on its last day of trade.

Brent North Sea crude for delivery in July dropped 89 cents to $103.91 a barrel in London trade.

Bernanke will appear before Congress's Joint Economic Committee on Wednesday to give an update on the outlook for the world's biggest economy.

Global markets were expected to closely watch for an indication on when the Fed will start winding down its massive bond-buying program to boost the economy.

Analysts meanwhile said that ample global supplies of crude were keeping a lid on prices.

"Crude bulls tried to push prices higher, but high stocks of the fuel tapered gains," Phillip Futures said in a market commentary.

Rich Ilczyszyn of iiTrader said the New York market was in a holding pattern.

"We know there is plenty of oil supply, but with the equities market higher and in the week before Memorial Day, there is the notion that there is going to be some demand," he said.

US gasoline inventories come under closer scrutiny as the summer vacation driving season kicks off on the Memorial Day holiday weekend.

Ilczyszyn pointed to a narrow range of trading that was growing increasingly smaller, between about $92 to $97 over the past three weeks.

"Clearly something is going to happen here," he said. "It indicates a big move is going to come soon if demand doesn't pick up when the driving season starts."

The dollar extended losses against the euro as foreign exchange traders let up on expectations Federal Reserve Chairman Ben Bernanke would hint at cutting back on US bond purchases.

"The dollar's move has been pretty strong lately, maybe you're seeing a little more profit taking," said Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut.

The US dollar fell 0.6 percent to 83.764 against a basket of six currencies. Crude oil prices are denominated in US dollars and when the value of the currency sinks, prices tend to rise to offset the weakness.

MSCI's all-country world equity index rose 0.51 percent to its highest since June 2008.

"Although the energy complex is still encountering a mix of both bullish and bearish macroeconomic drivers, it now appears in a mode in which it is picking and choosing, while prioritising bullish rather than bearish movers," Jim Ritterbusch, president of Ritterbusch Associates in Galena, Illinois, said in a report.

"Today's new all-time highs in the stock market kept speculative flows largely concentrated on the buy side."

Brent crude for July edged up above $105 per barrel, hitting a high of $105.31 during the session, but was unable to hold its gains. Brent settled 16 cents higher at $104.80 per barrel, breaching the 50-day moving average.

US crude futures for June delivery, which expire at the end of trading on Tuesday, ended the day up 69 cents or, 0.72 percent, at $96.71 per barrel. US crude managed above the 10-and-15 day moving averages on a continuation chart.

Crude bulls tried to push prices higher, but high stocks of the fuel tapered gains. The closer the market pushes to the 2013 US crude oil high of $98 per barrel, the more resistance it faces, McGillian added.

The International Energy Agency expects weaker demand growth for oil in 2013, along with higher supply.

Commercial domestic stockpiles of crude hit 395.5 million barrels in the week to May 3, according to the data from the US Energy Information Administration, the highest level since the agency began keeping records in 1982.

Crude oil stockpiles have since eased, but remain high. Stockpiles likely fell for a second consecutive week on higher refinery activity and lower imports, a preliminary Reuters poll of seven analysts showed on Monday.