Oil prices rebounded from heavy losses on Thursday as dealers calculated the potential economic fall-out of attacks in central London was likely to be limited. US crude traded at the close down 53 cents at $60.75 a barrel.
Earlier, as it became clear that blasts on London's transport system were deliberate, crude fell from a record high of $62.10 to an intraday low of $57.20 a barrel.
London Brent crude fell to a low of $55.55 before recovering to $59.22 a barrel at 1830 GMT, down 63 cents on the day.
Initial concerns were that the attacks, thought likely by security experts to be the work of al Qaeda, might cause a fall in oil demand similar to that following the September 11, 2001 attacks in the United States.
"The bombing in London highlights global growth concerns and any slowing of demand would be considered quite bearish," said Kyle Cooper, an analyst with Citigroup in Houston.
But as prices bounced back dealers said the economic impact looked likely to be limited.
"It is not 9/11 in its devastation or its impact on global demand," said Nauman Barakat, senior vice president at brokers Refco. "Therefore this sell-off will be very temporary."
Economists at Goldman Sachs said in a note to clients that it was hard to draw conclusions yet but said more factors would have to come into play for there to be a lasting economic impact.
Those factors would include further terrorist attacks in the next few days, signs of "notable deterioration" in consumer spending and a "major shift" from central banks on policy priorities.
The economists said the event appeared more akin to last year's Madrid bombings than the 9/11 attacks.
A rise in US stocks of distillate fuels, including heating oil and diesel, also helped undermine prices.
Distillate inventories rose 4 million barrels to 117 million barrels in the week to July 1 on high refinery run rates, the US government's Energy Information Administration said.
The increase lifted distillate inventories to a 3.2-million barrel surplus compared to a year ago, from an 800,000-barrel surplus last week.
Dealers were also watching the approach of hurricane Dennis towards US Gulf of Mexico oil facilities.
Storms in the US Gulf have compounded anxieties about the ability of stretched global crude production and refinery operations to meet demand.
The season's first Atlantic hurricane, Dennis is on track for the oil and natural gas fields off Louisiana, Mississippi and Alabama and is expected to reach land by Sunday, the US National Hurricane Centre said.
Tropical storm Cindy this week forced energy companies to shut in some 190,000 barrels per day (bpd) of output and some refinery units to close.
Last September's hurricane Ivan knocked out 45 million barrels of Gulf output over several months and helped oil prices climb past $50 a barrel for the first time.