Latvala - in his Volkswagen - came home third fastest to move a slim 3.6 seconds clear of colleague Andreas Mikkelsen, who also suffered an accident as he dropped his car into a ditch at high speed to lose valuable seconds.
Latvala, who recorded his first rally win here in 2008, insists it is important he keeps his focus on Saturday to remain in contention.
He told told the official World Rally Championship website, www.wrc.com: "My tyres were finished and I Iost a lot of time in such a short stage.
"It wasn't a good feeling but I saved tyres yesterday so I have good rubber for the final day tomorrow.
"Everything is going in the right direction but I need to be really focused for the final leg."
Norwegian Mikkelsen currently sits second in the standings ahead of compatriot Mads Ostberg in his Citroen and the Ford Fiesta RS of Mikko Hirvonen, while Ogier fell down to ninth overall following his accident.
Mikkelsen admitted finishing in the top three this weekend would be a "nice experience", saying: "We drove quite fast while avoiding all the rocks.
"We could have gone faster and tried to catch Jari-Matti but then you have to take risks.
"I have never been on the podium before in my life so it would be a nice experience, but at the same time I want to fight for the win."
The final leg on Saturday is the longest as drivers tackle two identical loops of four stages covering 142.16km before the finish in Karlstad.