Oil dropped on the Spanish downgrade but pared losses on revived hopes of further liquidity injections from the Fed.
In London, Brent crude, widely viewed as a global oil benchmark, fell 0.58% to $119.22 per barrel.
US crude oil dropped 0.32% to $104.22 a barrel.
The US Energy Information Administration has said that global oil and fuel supply exceeded demand by 500,000 barrels per day in the last two months even as Western sanctions have hit Iranian crude production.
The US sanctions against Iran and a pending embargo on Iranian oil by the EU have already reduced the OPEC-member's oil output 400,000 barrels per day compared to a year ago, the report said.
World oil prices were mixed over the course of the week that ended with official data Friday showing US economic growth slowed sharply to 2.2% in the first quarter of the year.
The Federal Reserve on Wednesday said it saw US growth picking up and unemployment falling by the end of the year, as it stuck fast to existing stimulus policies despite some short-term economic headwinds.
