Oil fell on Thursday after Iran's release of 15 British sailors and marines eased worries over crude shipments from the world's fourth-largest exporter.
U.S. crude for May delivery fell 10 cents to settle at $64.28 a barrel.
U.S. crude had jumped above $68 last week as some investors took the view that the standoff over Iran's detention of the Britons increased the risk of a disruption to oil shipments.
"There is a little bit of selling coming in. People feel a little bit happier about the continuity of oil supplies," said Rob Laughlin, a broker at Man Financial in London.
A big drop in U.S. gasoline inventories ahead of peak summer demand in the world's top consumer, reported by the U.S. government on Wednesday, gave prices some support.
The market briefly rallied on a report that a bomb attack had disrupted supplies from southern Iraq. Prices eased after an Iraqi oil ministry spokesman said there was no impact on
Iran's capture of 15 British military personnel had pushed U.S. crude to a six-month high of $68.09 last week and prices are still around $3 higher than before the Britons were seized on March 23.
The OPEC nation exports about 2.5 million barrels per day of oil and sits on the Strait of Hormuz, a shipping route for some two-fifths of globally traded oil.
U.S. gasoline supplies remained supportive for the market. Stockpiles fell by 5 million barrels, data from the U.S. Energy Information Administration showed on Wednesday.
"The gasoline situation tightened considerably and that limited the downside. Stocks are extremely tight," said Gerard Burg, an analyst from National Australia Bank.
The decline included a drop of 2 million to 3 million barrels from the previous week, but still alarmed traders in the run-up to the peak summer driving season.
Gasoline stocks have fallen to the lower half of the historical range, partly as a result of refinery outages, which help to explain high levels of U.S. unrefined crude.
Crude oil inventories rose by 4.3 million barrels, much more than expected.