Global benchmark Brent crude slid below $83 per barrel early in the session, partly on concerns the U.S.-China trade war could weaken crude demand in China.
But prices bounced off session lows as investors bet that Sunday's move by China's central bank to slash lenders' reserve requirements would spur economic growth, analysts said.
"Every time China cuts interest rates, they increase oil consumption," said Phil Flynn, an analyst at Price Futures Group in Chicago. "Cooler heads are prevailing."
Brent crude hit a session low of $82.66 and then bounced back to trade 43 cents lower at $83.73 per barrel at 2:25 ET. Brent hit a four-year high of $86.74 last week.
U.S. crude ended Monday's session down 5 cents at $74.29, off its session low of $73.07.
Oil traders initially reacted to a selloff in Chinese stocks, but as the U.S. stock market opened higher, "we've pulled back dramatically," said Mark Anderle, an energy trader at TAC Energy.
Also pressuring oil below $83 a barrel in early trade were reports that some Iranian oil exports will keep flowing after the U.S. re-imposes sanctions. Two companies in India have ordered Iranian barrels in November, India's oil minister said on Monday.
The Trump administration is considering waivers on sanctions, a U.S. government official said on Friday. Washington had been pressuring governments and companies worldwide to cut imports of Iranian oil to zero under U.S. sanctions that take effect Nov. 4.
On Monday, Iran's Oil Minister Bijan Zanganeh said a claim by Saudi Crown Prince Mohammed bin Salman that the Kingdom could replace Iran's crude exports was "nonsense."
"Iran's oil cannot be replaced by Saudi Arabia nor any other country," Zanganeh said, according to his ministry's website.
U.S. market participants also reacted to a bullish report by market intelligence firm Genscape showing crude inventories recently fell at the U.S. storage hub in Cushing, Oklahoma, analysts said.
"People think it's an opportunity to take more exposure," said Michael Corcelli, chief investment officer at Alexander Alternative Capital LLC in Miami.
— CNBC's Tom DiChristopher contributed to this report.