Cooling U.S. oil prices bounced back up on Wednesday on late fund managers' buying, after prices initially fell on a U.S. government report of a rise in commercial fuel inventories.

U.S. light crude futures (search) settled 26 cents higher at $37.54 a barrel, having dipped as low as $36.45 earlier in the day, its lowest intraday traded level in five weeks. Analysts chart nearby support at $36.10.

Last week, U.S. crude peaked at $42.45, the highest price since the New York Mercantile Exchange (search) launched its crude contract in 1983.

London benchmark Brent crude ended up 24 cents at $35.29 a barrel.

Dealers said that despite the generally bearish inventory data, the recent sharp crude price declines helped limit losses on the oil supply gains and allow for the late price reversal.

The market is also wary of being too short with another long weekend ahead and the Middle East region remaining vulnerable to supply disruptions from violence.

The New York Mercantile Exchange (NYMEX) will be shut Friday for the national day of mourning for former President Ronald Reagan (search).

"The fact that we ended higher despite the data may be a sign the downturn has had some of the steam taken out," said Nauman Barakat, senior vice president at Refco. "There was some bottom feeding by the funds."

Prices had initially eased on Wednesday after the Energy Information Administration (search) reported that crude oil stocks rose by 400,000 barrels to 302.1 million barrels last week, their highest in nearly two years.

Gasoline stocks also rose by 2.1 million barrels to 206.4 million, easing concerns that U.S. refineries will struggle to meet summer gasoline demand as Americans take to the roads for vacations.

Analysts said the report suggested strong gasoline demand growth that has fueled oil's price rise may be starting to slow.

"Gasoline consumption is up only 0.4 percent (from last year) when three or four weeks ago it was 3 or 4 percent. That's a dramatic decline in the growth rate of gasoline consumption," said Bill O'Grady, director of futures research at A.G. Edwards in St. Louis.

"What that tells me is we have reached a pricing point that gasoline consumption has been affected," he added.

Prices have fallen since last week's deal by the Organization of the Petroleum Exporting Countries (search) (OPEC) to raise official production by 2 million barrels per day to 25.5 million bpd from July and a further 500,000 bpd from August.

The agreement would bring the official production ceiling into line with actual output. But OPEC members Saudi Arabia and the United Arab Emirates have promised to pump an additional 1 million bpd of crude regardless of the OPEC agreement to cool the market.

Supporting prices, however, were lingering concerns over the potential impact of a general strike in OPEC member Nigeria, the world's seventh biggest oil exporter with production of nearly 2.5 million barrels per day (bpd).

Oil multinationals operating there say they have made contingency plans to try to avoid any short-term disruptions. Nigeria's crude oil exports continued to flow, shipping agents said.

In Iraq, supplies have been hit by sabotage along its export pipeline to the north, which has been idle since the end of May. This means exports are limited to the 1.65 million bpd shipped from the country's Gulf terminal.