In late afternoon London deals, Brent crude for delivery in August sank 70 cents to USD 113.76 a barrel. On the upside, US benchmark West Texas Intermediate for August rose 32 cents to USD 106.35 per barrel.
US gross domestic product (GDP) shrank at a 2.9 per cent annual pace in the first three months of 2014, revised official data showed. That was much worse than the previous estimate of 1.0 percent and the sharpest decline in five years.
"Weaker US GDP and some lessening of Iraq tensions have prompted further selling, and expectations of lower US consumption have signalled that for now the oil spike appears to have run its course," said analyst Chris Beauchamp at trading firm IG.
"However, even with the risk of a loss of Iraqi supply receding, the world will have to get used to oil running at a slightly higher level for the foreseeable future, so long as the 'doomsday scenario' of an Iraq completely under ISIL control remains.
" In addition, the US government's Department of Energy announced that American crude reserves rose by 1.7 million barrels in the week ending June 20. That indicated weaker demand and confounded market expectations for a drop of 1.2 million barrels.
Investors are still monitoring the crisis in crude producer Iraq, despite fading fears that it could result in a major supply disruption.
Iraq violence had sent oil prices soaring late last week to their highest levels since September 2013. Jihadist insurgents have captured swathes of Iraqi territory in a lightning offensive that began on June 9, but they have yet to directly threaten the key oil-producing region in the south.
"Unless we see any major disruption to Iraqi oil assets in the south, we aren't going to see further risk premium associated with the crisis," said Desmond Chua, market analyst at CMC Markets in Singapore.
New York prices also climbed today after the Wall Street Journal reported that the US government has "cleared the way for the first exports of unrefined American oil in nearly four decades".
Citing rulings that have not yet been announced, the newspaper said the Commerce Department has given two companies -- Pioneer Natural Resources and Enterprise Products Partners LP -- permission to ship a type of ultralight oil known as condensate for foreign buyers. The shipments could begin as soon as August, the paper said, citing people familiar with the matter.