Oxygen is a natural byproduct of photosynthesis. Underwater plants remove carbon dioxide produced by fish and other aquatic animals from the water and combine it with the sun's energy to produce glucose. As long as the plants receive sunlight and are submerged in water, the plant will release oxygen into the water.
Although plants play an important part in oxygenation of the water, most of the dissolved oxygen in water comes from the air. Moving or rough water will have more oxygen in it than still water. Floating plants like algae can also lower oxygen levels in water because they act as a shield that prevents light from reaching submerged plants. They also prevent water from absorbing oxygen from the atmosphere.
Oxygen levels fluctuate in water for a number of reasons. Oxygen levels will be the highest during the late afternoon on a sunny day because the plants have spent all day releasing oxygen. Lowest levels are found right before dawn because plants stopped producing oxygen when the sun went down, but aquatic animals continued to consume it. Water temperature, weather and pollution also contribute to the amount of oxygen found in water.
Some plants are better producers of oxygen than others, according to Amy Richard with the University of Florida. Oxygenating plants are usually ones that grow totally submerged. They essentially starve algae in the water by removing nutrients that algae need. Examples of oxygenating plants include fanwort (Cabomba caroliniana), nymphoides (Nymphoides spp.), coontail (Ceratophyllum demersum) and bacopa (Bacopa caroliniana).